Yes, terrace is a Scrabble word!

Verb

1. Provide (a house) with a terrace

2. Make into terraces as for cultivation

Noun

1. Usually paved outdoor area adjoining a residence

2. A level shelf of land interrupting a declivity (with steep slopes above and below)

3. A row of houses built in a similar style and having common dividing walls (or the street on which they face)