Texas manufactured housing activity stabilizes after 2022 correction
COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Despite upticks in interest rates and ongoing macroeconomic concerns, general business activity increased in Texas’ manufactured housing industry for the first time since April 2022, according to the latest Texas Manufactured Housing Survey (TMHS).
Supply chains continued to smooth, and the costs of raw materials fell for the ninth consecutive month amid moderating inflation.
“In the first two months of 2023, Texas’ manufactured housing plants pulled back production to the lowest level in the past ten years,” said Rob Ripperda, vice president of the Texas Manufactured Housing Association, “but retailer sales to consumers are running near the same elevated levels as they were in 2021.”
TMHS respondents mentioned saturated inventory for retailers back in December, but those levels appear to be normalizing as all but one manufacturer in the February survey expected sales to increase in the short run.
“March marks the beginning of the spring selling season, so sales should be picking up across the state, and retailers are going to need more inventory,” said Ripperda.
Manufacturers plan to expand payrolls and workweeks after cutting back last summer. They also anticipate an increase in available workers, which will temper labor costs moving forward.
On the other hand, the industry is slowing plans for capital expenditures, possibly in response to a potential increase in the cost of capital. On the demand side, borrowing costs affect the manufactured housing industry through multiple channels.
“The Federal Reserve is signaling further rate hikes that could translate into higher mortgage rates,” said Dr. Harold Hunt, senior research economist at the Texas Real Estate Research Center. “Even so, this could still result in better manufactured housing sales as consumers find it harder to qualify for traditional site-built homes.”
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.
