Townhomes Are the Budget Break Buyers Have Been Waiting For

Home shoppers are looking for a way to stretch their dollar—and townhomes are turning out to be a budget-friendly path to homeownership.

Realtor.com® economists analyzed data focusing solely on townhomes and found that in January 2020, the share of active listings that were townhomes was 4%. By January 2025, that number grew to 5.4%, and last month, it rose even higher, to 5.9%.

"Townhomes now make up the largest share of the for-sale homes on the market in our data history," explains Joel Berner, senior economist at Realtor.com. "And they appear to be picking up steam as builders push forward with smaller and more affordable projects to meet the demand of buyers who are struggling to make a purchase in the detached home (single family) space."

The year is starting off more buyer-friendly, with higher inventory and falling home prices, allowing home shoppers more time to make decisions.

The number of actively listed homes rose 10% compared to January 2025, marking the 27th consecutive month of year-on-year inventory gains, according to the Realtor.com Monthly Housing Trends report. The national median list price was $399,900.

Realtor.com economists are expecting the housing market to be more balanced this year—a reality that would be shaped by steadier price growth, mortgage rates, and negotiating power that leans toward buyers.

But buyers who still feel priced out of single-family homes are turning to townhomes. Many times, they're able to still get the bedrooms and bathrooms needed, along with living space.

The price per square foot rose 4.3% in the Northeast and Midwest (1.9%) but declined in the South (-2.7%) and West (-1.5%).

More for your money

Townhomes are growing in number and share because they offer a more affordable alternative to single family homes in a period when affordability is top of mind for buyers.

Builders are starting to deliver more of this townhome inventory. In the most recent new-construction data from Census, the seasonally adjusted annual pace of permits issued for two- to four-unit home projects was up 3.8% year over year.

"Townhomes are generally lower priced than single-family homes and sometimes offer community services and amenities that single-family homes (especially those outside HOAs) may not," says Berner. "They also tend to be concentrated in more urban areas and closer to city centers. The drawbacks are that they are generally smaller and, by definition, share walls with other homes."

Melissa Cervin, vice president of marketing at Lombardo Homes, says their company, which builds in Michigan and Missouri, is seeing buyers drawn to the low-maintenance lifestyle.

"They value the convenience of minimized responsibilities such as yard work and snow removal, which provides greater freedom and flexibility," Cervin says.

Berner adds, "In all, this is not a dramatic change in the makeup of the market—just a trend that's starting to emerge."