Summer slump continues for Texas’ manufactured housing industry, future outlook holds firm 

COLLEGE STATION – Manufactured housing activity ticked downward for the first time in nearly two years, according to the August Texas Manufactured Housing Survey (TMHS). Growth rates for sales and production volumes started slowing earlier in the summer and have now fallen into negative territory, pulling down the current outlook for Texas’ manufactured housing industry. 

“Activity has certainly calmed down from the post-pandemic boom,” said Wes Miller, Ph.D., senior research associate at the Texas Real Estate Research Center at Texas A&M University (TRERC). “Some of the negative reading this month, however, may be due to changes in the TMHS panel of participants, as there has been some recent turnover in plant management due to retirements and job switching. The updated panel revealed increased challenges in the current environment, but the six-month outlook held relatively firm, and the industry continued to ramp up capital expenditures.” 

Despite the run-up in investment spending, manufacturers paused hiring activity and expect payroll growth to be relatively flat in the fourth quarter and into next year. 

“Retail sales of manufactured housing appear to have slowed in July, which would explain why manufacturers saw lower order flow in August,” according to Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association (TMHA). “We’re moving into the latter part of the year when sales to homeowners typically decrease, so retailers will be less inclined to take a one-out, one-in inventory approach.” 

The TMHS production index tends to lag the sales metric by one month, so activity may dip further in September. 

“The TMHS future sentiments for orders, production, and backlogs, however, indicate that manufacturers expect the market to stabilize after the recent decline.” 

Moderating business activity mirrored macroeconomic trends as the global economy and U.S. labor market cooled in response to higher interest rates.  

“Raw material prices have been dropping overall, and the decline has primarily been attributed to slowing global economic activity,” said TRERC Research Economist Harold Hunt, Ph.D. “Energy prices have also seen significant declines, with natural gas prices dropping by approximately 80 percent from their August 2022 peak. Fluctuations in energy costs, particularly oil and natural gas, can have a ripple effect on other raw material prices.” 

The TMHS price index for raw materials fell into negative territory, continuing a downward trend after spikes in March and April. 

“Decreases in raw material prices can reduce production expenses, potentially improving profit margins if manufacturers can maintain their retail sales prices,” Hunt said. 

While not measured directly in the survey, housing manufacturers’ margins may be pressured as respondents noted larger drops in prices received for finished homes. 

“One potential disruptor to watch is tariffs, which can result in higher prices for raw materials,” continued Hunt. “Both presidential candidates have signaled that they favor tariffs to some extent.” 

The threat of tariffs, however, did not elevate housing manufacturers’ price outlook in August. Ultimately, the summer slowdown and evolving price dynamics failed to curb overall optimism, as the TMHS index measuring the six-month outlook held firmly in positive territory, and the outlook uncertainty improved to its highest point of the year. 

The TMHS is a sentiment survey that gauges current conditions and expectations surrounding Texas’ manufactured housing industry. All TMHA members with manufacturing facilities in the state are invited to participate, and the survey panel represents 89 percent of HUD-code homes produced in Texas. The survey, created as a joint project conducted for the manufactured housing industry by TMHA and TRERC, is updated monthly.