COLLEGE STATION – Manufactured housing sales have slumped for 15 consecutive months, according to the Texas Manufactured Housing Survey (TMHS), but the latest data indicate improvements on the horizon.
“Supply-chain disruptions and surging demand in 2021 and early 2022 forced housing manufacturers to turn customers away due to capacity constraints,” said Wesley Miller, senior research associate at the Texas Real Estate Research Center (TRERC). “The tables turned in April of last year when demand dropped in response to higher interest rates. Manufacturers slowed production and subsequently shrank payrolls.”
While sales and production remained subdued in January, expectations elevated for the third straight month, and the TMHS business-activity index swung 60 points upward—its largest monthly movement in either direction since the survey started in June 2020.
“The supply chain has been steadily improving over the last six months,” according to TRERC Research Economist Dr. Harold Hunt. “Freight and fuel costs have dropped, although we are seeing fuel prices rebound slightly as of late.”
The TMHS corroborated these developments through consistent decreases in the supply-chain disruptions and raw-materials price indexes.
“Mortgage interest rates have also come down from their highs, and the combination of these factors are contributing to the recent optimism,” said Hunt.
Despite improved sentiments regarding macroeconomic factors, housing manufacturers are increasingly concerned about regulatory costs and the impact on their operations.
“The Department of Energy’s (DOE) efficiency standards for manufactured homes are scheduled to go into effect May 31 of this year,” said Rob Ripperda, vice president of the Texas Manufactured Housing Association. “The Department of Housing and Urban Development (HUD), however, administers the manufactured-housing program and opted not to recommend the wholesale adoption of the DOE standards into the HUD code.”
Ripperda said the Manufactured Housing Consensus Committee (MHCC) instead proposed energy efficiency updates that more appropriately considered the cost impacts of the changes and preserved the program’s statutory obligation to affordability. He said that with MHCC submitting recommendations, HUD is expected to draft and publish proposed rules that will process through the formal comment and finalization periods.
“There is little chance that all those steps occur before the May 31st implementation deadline,” Ripperda said, “and members of Congress are calling for DOE to delay implementation and to work directly with HUD to ensure the standards between the two agencies are not contradictory.”
The Texas Real Estate Research Center has a wealth of economic information online for free.