COLLEGE STATION – Texas’ manufactured-housing market is booming, but March presented a myriad of concerns that weighed on industry optimism. The latest Texas Manufactured Housing Survey (TMHS) revealed challenges ranging from supply-chain disruptions to skilled-labor shortages, but the primary threat pertained to regulatory changes.
“We are roughly one month away from hearing what the new rule from the U.S. Department of Energy (DOE) entails for manufactured homes and when implementation will become mandatory,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Manufacturers are skeptical of the feasibility of many of the proposed changes and question whether the DOE has accounted for the cost of drafting and approving new designs, retooling factories, and ensuring compliance.”
The TMHS reflected these sentiments with the regulatory- and uncertainty-expectations indexes reaching their worst values since the survey began in June 2020.
“A DOE analysis concluded that the lightest of the rules under consideration would increase the purchase price of single-section homes by 1.2 percent, and the highest standards would increase prices 4 to 9 percent depending on the type of home and which Texas market manufacturers are shipping to,” said Ripperda.
“The industry struggled to contain costs in March as supply-chain disruptions and the overall inflationary environment elevated input prices and led to a near-unanimous increase in prices received for finished homes. Consumers’ purchasing power also suffered from recent interest-rate fluctuations,” he said.
“According to the Mortgage Bankers Association, mortgage-interest rates are rising at a clip unseen since early 2011,” said Dr. Harold Hunt, research economist at the Texas Real Estate Research Center (TRERC) at Texas A&M University. “Although financing rates are expected to increase similarly for manufactured housing, the industry maintains its affordability advantage over site-built homes.”
“TRERC data show the median close price of homes sold through Multiple Listing Services surpassed $317,000 and $362,000 for existing and new homes, respectively,” said Hunt. “This is significantly higher than the retail price for manufactured housing.”
The affordability advantage has fueled demand for manufactured homes, pushing the TMHS production and business-activity indexes positive in 20 of the past 22 months. Increased capital expenditures revealed the industry’s efforts to satisfy growing demand, but supply-side threats lowered expectations and optimism over the next six months.
The Texas Real Estate Research Center has a wealth of economic information online for free.