Search for housing affordability fuels manufactured-housing industrySearch for housing affordability fuels manufactured-housing industryhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=272112022-03-08T06:00:00Z2022-03-08T17:00:00Z

​COLLEGE STATION – Despite a myriad of supply-side challenges, Texas’ housing manufacturers are bullish as they enter the spring selling season.

According to the latest Texas Manufactured Housing Survey (TMHS), the industry’s outlook has continually improved since the initial COVID-19 shock, and optimism remains high for the first two quarters of 2022.

"In light of the strong run-up in site-built single-family housing, the demand for more affordable manufactured homes remains strong," according to Dr. Harold Hunt, research economist at the Texas Real Estate Research Center at Texas A&M University. "However, large backlogs have hampered the industry’s ability to meet that demand for some time, prompting sales teams to stave off new orders until production catches up."

The TMHS production index increased for the ninth consecutive month with expectations of additional activity on the horizon.

"As infections from the COVID-19 Omicron variant wane, manufacturers are benefiting from a healthier, more productive workforce that can whittle down backlogs," said Hunt.

Manufacturers expanded payrolls and increased workweeks during February, but finding and attracting skilled workers remained a significant obstacle. Labor costs elevated substantially, contributing to broad-based inflation due to supply-chain disruptions.

"Home production increased during the first two months despite a host of headwinds from materials sourcing, labor availability, and large cost increases," said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association.

The TMHS panel unanimously reported higher prices paid for raw materials, much of which were passed on to retailers and consumers.

"Manufacturers believe they can pick up the pace of production even more, but every week brings another hurdle, and a final rule from the Department of Energy on energy efficiency requirements is set to drop in May that could add significant friction to getting new homes out the door," said Ripperda. "The factory-built model only works when you can source your materials at scale. If a standard product is no longer allowed because of a regulatory change and the mandated substitute isn’t available at the necessary quantities, you’ve got the makings of a slowdown."

The TMHS reflected expectations of new federal oversight with the six-month regulatory index reaching its highest level since the survey launched in June 2020, but production projections held firm.

The overall outlook, however, remained favorable, and that confidence was corroborated by heightened capital expenditures and plant investment.

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