COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Recent recessionary concerns suggest a possible slowdown in manufactured housing sales for the remainder of 2022, according to industry experts and the Texas Real Estate Research Center at Texas A&M University (TRERC).
“It is now quite obvious that the U.S. economy is slowing,” said TRERC Research Economist Dr. Harold Hunt. “Mortgage rates are significantly higher than they were a year ago, and that is already putting a damper on the housing market.”
The latest Texas Manufactured Housing Survey (TMHS) sales index registered its lowest reading on record (the series began in June 2020), and activity is expected to slow in the second half of the year.
“There is a wide disparity between economists, however, regarding how much the economy will slow in the months ahead, and employment growth remains strong,” said Hunt.
Manufactured-housing output and payrolls held firm in June, but TMHS respondents contemplated pulling back production as they adjust to weaker demand.
While raw-materials prices fell for the first time in eight months, supply-chain issues continued both upstream and downstream from manufacturers.
“Market dynamics have shifted from supply constraints at the plant level to demand constraints at the retail level,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Texas retailers are battling a lack of transportation and install services to deliver sold homes, falling foot traffic from new customers, and increased inventory costs on any deals that fall through.”
These challenges, combined with impending regulatory changes from the Department of Energy, resulted in heightened uncertainty and a more moderate outlook after a bullish start to the year. Expectations of future interest-rate increases suggest that these headwinds may persist for the foreseeable future.