Why Townhouses are Gaining Popularity Among First-Time Homebuyers

Estimated reading time: 4.5 minutes

Townhouses have grown in popularity over the past decade and are often seen as a hybrid between a condominium and a single-family home.

According to January 2026 data from the National Association of Home Builders, townhouses made up nearly 19% of all single-family home starts during the third quarter of 2025. Just ten years ago, townhouses made up about 1 in 10 newly built single-family homes. Now, townhouses make up nearly 1 in 5 newly built single-family homes.

This growth gives buyers more affordable housing options than they had in the past. Because starter homes prioritize affordability and practicality, many buyers are turning to townhouses as a modern version of the traditional starter home. But availability isn’t the only reason townhouses are becoming popular starter home solutions.

What is a Starter Home?

A starter home is also sometimes known as an entry-level home. Historically, these homes were the most affordable properties for first-time homebuyers. They are often smaller and available at a lower cost than other homes that may be larger or offer more amenities. Because of their size, buyers benefit from lower monthly payments and maintenance costs.

Traditionally, owners would stay in their starter home for approximately three to seven years. This was often long enough for homeowners to build equity, which could later help them purchase a larger home.

Why Townhouses Appeal to First-Time Homebuyers

Over the past decade, townhouses have increasingly become a transitional home option for first-time homebuyers, especially for buyers who may only have experience with renting or shared living spaces.

Lifestyle and Flexibility

While single-family homes are often located in suburban or rural neighborhoods, townhouses are commonly built closer to community amenities, employment centers, and city areas. Townhouse buyers may be able to save time and commuting costs compared to homeowners who live farther from city centers.

Affordability

When a homebuyer is selling their existing home to purchase another, they often have a competitive advantage over first-time homebuyers because they can use the equity from their previous home. According to Bankrate, townhouses may cost about 10-20% less on average than single-family homes, although price differences vary slightly by location.

For first-time homebuyers, this could translate to lower upfront and ongoing costs than purchasing a single-family home.

Property Size

According to the United States Census Bureau, the average size of single-family homes built in 2024 was about 2,367 square feet. Townhouses are typically smaller, with modern townhomes ranging from about 1,200 to 1,800 square feet.

With less square footage, townhouses are less expensive to build and thus less expensive to buy. This can help keep purchase prices and monthly payments lower when compared to a single-family detached home.

Maintenance and Upkeep

In addition to monthly mortgage payments, first-time homebuyers must also budget for maintenance and upkeep costs. In many townhouse communities, a Homeowners Association (HOA) may handle landscaping, snow removal, and maintenance of shared exterior elements. The exact responsibilities vary depending on the community’s HOA guidelines.

Townhouse vs. Single-Family Home: What’s the Difference?

For many first-time homebuyers, choosing between a townhouse and a single-family home comes down to budget, maintenance, and lifestyle preferences. Townhouses are typically more affordable and require less exterior maintenance, making them appealing to buyers who want to ease into homeownership.

Single-family homes, on the other hand, usually offer more privacy without shared walls, larger yards, and greater flexibility for renovations or additions.

While both property types allow buyers to build equity, townhouses may be a more accessible starting point for buyers who want the benefits of homeownership without the higher upfront costs often associated with detached single-family houses.

Homeownership Your Way

Townhouses offer a realistic path into homeownership without stretching out a buyer’s budget or resources. They can be a great option for young professionals, single buyers, or anyone looking for a manageable first home.

What works best for one person may not be the solution for you. That may not mean a different timeline or delays in homeownership—just a different house type.

This is just one of the reasons why we offer a variety of home financing solutions for our borrowers. We know that just like people, not every loan is a one-size-fits-all solution. Ready to learn more about how you can succeed in the homebuying process in a way that works for you? Let’s get started.