Texas housing manufacturers expect rebound in early 2023
COLLEGE STATION, Tex. (Texas Real Estate Research Center) – After booming during the COVID-19 pandemic, the manufactured-housing correction continued as business activity slipped for the eighth consecutive month, according to the November edition of the Texas Manufactured Housing Survey.
All respondents noted a decrease in month-over-month sales, and the production index remained in negative territory. The number-of-employees index fell to its lowest level on record, indicating payroll reductions as manufacturers adjusted operations, and average work weeks fell accordingly.
“Activity in the overall housing sector has stalled as a result of the Federal Reserve’s interest rate increases, and manufactured housing is not immune to the slowdown," said Dr. Harold Hunt, research economist for the Texas Real Estate Research Center. “The consensus is that rate hikes will continue into 2023, albeit at a slower pace, resulting in a generally negative short-term outlook for housing and housing-adjacent industries."
Despite current challenges, optimism over the next six months turned positive across multiple indicators. Manufacturers anticipate activity to rebound in 2023 through higher sales and production, and out-of-state shipments should pick up after stalling since May.
“Sales to retailers are subdued by downstream inventory constraints, particularly as floor plan lenders pulled back overage amounts and credit dried up earlier this year," said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Fortunately for manufacturers, end-consumer sales are holding up relatively well and are still on pace to finish the year above 2021 levels. Higher housing costs across the board appear to be pulling consumers into the manufactured-home market, and the industry’s affordability advantage remains a source of optimism."
Manufacturers anticipate additional supply-chain smoothing, leading to lower costs for raw materials and downward pressure on sale prices. While the clouds may be clearing for a rebound in early 2023, looming regulatory changes and general macroeconomic uncertainty remain the primary headwinds to the industry.
Funded by Texas real estate licensee fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.
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