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Texas’ manufactured housing industry provides early signal for calming inflation

COLLEGE STATION – Supply-chain disruptions fueled inflationary pressures over the past year, but improvements are underway, according to the latest Texas Manufactured Housing Survey. The supply-chain disruption index fell to its lowest level since the survey launched in June 2020, and manufacturers anticipate additional relief through year end.

“Companies across several industries have been slowly increasing their materials inventory during the past months whenever possible,” said Dr. Harold Hunt, research economist with the Texas Real Estate Research Center at Texas A&M University. “In the case of lumber, which is a major input in manufactured housing, waning consumer purchases at the retail level have reduced demand pressure after surging during the pandemic. The price of lumber is currently less than a third of what it was in May.”

Lower input costs allowed manufacturers to relax the price of finished homes for the first time this year.

Severe worker shortages, however, pushed up labor costs and hindered industry activity.

“Earlier in the year, a full one-third of folks cited fears of contracting COVID-19 as a reason for not returning to work,” said Hunt. “As vaccination rates have increased, this fear has declined. Hopefully, this trend will continue, and workers will reenter the labor force. However, the Delta variant could still be a wildcard.”

Manufactured housing production flattened in August as plants may be operating near capacity, but backlogs are still declining as sales inched downward.

“Manufacturers have continued to find ways to expand production despite serious headwinds from supply-chains and the availability of labor to get those backlogs closer to normal,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “A couple of new plants are scheduled to come online in the next six months that will further help supply catch up with demand.”

Industry optimism was relatively widespread, and manufacturers ramped up capital expenditures in an effort to adjust to persistent, yet moderating, supply constraints as well as to satisfy projected growth.

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​Source: Texas Real Estate Research Center​​

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