Texas’ manufactured housing activity moderates, outlook remains positive

COLLEGE STATION – While Texas is undergoing a year-long manufactured housing boom, the industry’s expansion moderated in May, according to the latest Texas Manufactured Housing Survey (TMHS).

Production volume grew at a slower pace, offsetting an acceleration in sales volume and pulling down the TMHS business activity index from April’s record high. The monthly fluctuation led to a buildup of backlogs, but manufacturers expect some easing of sales growth that will allow them to catch up on orders during the second half of the year.

In addition to general business activity, payroll expansions normalized across Texas’ manufactured housing industry.

“Labor costs have been relatively stable over the past year, and manufacturers have been leveraging slack in the labor market by ramping up hiring activity and extending workweeks,” said Wes Miller, Ph.D., senior research associate at the Texas Real Estate Research Center at Texas A&M University (TRERC). “Although the TMHS number-of-employees index ticked down from a record last month, the index remained positive and expectations are trending upward.”

Input costs outside of labor also showed signs of calming, as the index measuring prices paid for raw materials declined after two consecutive months of unanimous increases.

“Prices for several key raw materials used in U.S. home construction have declined in 2024 compared to last year,” said TRERC Research Economist Harold Hunt, Ph.D. “Lumber prices are lower than the 2023 average, according to Fastmarkets, and S&P Global reports prices for steel products used in construction remain below 2022 levels. Although inflation remains a concern, prices for plastic products, such as PVC pipes and vinyl siding, have decreased, and raw material availability has improved.”

Decreased price pressures in the supply chain can directly affect the price of manufactured homes. TMHS respondents updated their expectations of prices they will receive for finished homes, pulling down the forward-looking index to its lowest level of the year.

“In April, nearly all TMHS respondents reported price increases for manufactured homes delivered to retailers,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association (TMHA). “By May, the consensus narrowed to half receiving higher prices and others observing no change. One respondent noted lower prices received for finished homes during the month. A similar down-shift in sentiment occurred for price expectations over the next six months.”

In addition to moderating prices and production, the TMHS indicated an uptick in regulatory burden after a two-month reprieve. These headwinds, however, failed to outweigh the industry’s optimistic outlook given robust demand for affordable housing products.

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.