Supply-side factors weigh on Texas’ manufactured housing industry optimism

​​COLLEGE STATION – Prices paid for raw materials soared for the fourth consecutive month, according to the latest Texas Manufactured Housing Survey (TMHS), with a spike in supply-chain disruptions and increased regulatory burden. 

Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association (TMHA), noted, “The U.S. Department of Housing and Urban Development (HUD) announced building-code changes in January that were scheduled to go into effect on March 15, forcing manufacturers to gear up for making a switch while also dealing with supplier shortages and lengthy backlogs. Fortunately, HUD has extended the effective date of implementation to July 21, giving manufacturers time to recover from the impacts of both the pandemic and Winter Storm Uri."

While manufacturers do not expect additional regulation in the next six months, there are no signs of reduced pricing pressure. Moreover, manufacturers observed slower growth in the labor supply as well as higher labor costs.

Survey data indicate a sluggish start to the spring season, with the volume of new orders and sales flattening. Backlogs remained elevated but showed initial signs of improving through summer.

"We still aren’t seeing much reduction in supply-chain bottlenecks," said Dr. Harold Hunt, research economist at the Texas Real Estate Research Center. “This is becoming a significant drag on the manufacturing process from end to end. If companies can’t make informed decisions about product deliveries to and from their factories, we may see more business uncertainty in the months ahead."

This sentiment was reflected in the March TMHS as the uncertainty index worsened for the second straight month. While industry optimism has waned during the first quarter, the overall outlook remains positive across the industry.

The Center and TMHA partner to produce a monthly survey of business conditions and expectations surrounding the manufactured housing industry.

The Texas Real Estate Research Center has a wealth of economic information online for free.