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COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Increased production and sales stimulated manufactured housing activity for the seventh straight month in August, according to the latest Texas Manufactured Housing Survey (TMHS). Robust activity helped bolster the industry outlook through at least the first quarter of 2024. ​

“One reason for the recent optimism could be the relative stability of chattel loan interest rates compared with mortgage rates for site-built housing,” said Dr. Harold Hunt, research economist at the Texas Real Estate Research Center at Texas A&M University (TRERC). “Chattel loans are characterized by a smaller secondary market, and lenders have more flexibility since they aren’t trying to conform to conventional rules to sell notes.”  

Despite the relative stability in chattel loan rates, prices received for finished homes have trended downward for more than a year. That trend may be shifting as raw material costs jumped upward in August, and manufacturers expect ongoing increases for the rest of the year. 

“Lumber and diesel fuel prices increased 5.7 and 8.4 percent, respectively, during the first three weeks of August,” according to Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Lumber prices have been volatile and have moved down from their intra-month peak, but diesel prices have climbed steadily since July and hit manufacturers both when shipping materials in and, even more so, when shipping homes to retailers.” 

Labor costs also elevated in August, contributing to pricing pressures that are building in the industry. 

“Despite raising wages, expanding payrolls, and extending workweeks, housing manufacturers are struggling to keep pace with the current flow of orders,” said Wes Miller, TRERC senior research associate. “The industry’s optimistic outlook outweighed these obstacles, prompting preparations to increase capital expenditures despite the higher interest rate environment.” 

All TMHA members with manufacturing facilities in the state were invited to participate in the sentiment survey, and the survey panel represents 89 percent of HUD-code homes produced in Texas. 

Funded by Texas real estate license 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. ​

​COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Despite higher interest rates, Texas’ residential mortgage industry expressed an improved outlook in July, according to the latest Texas Residential Mortgage Survey (TRMS). The bright spot for current conditions was the stable increase in pre-approved customers looking for homes.​​​

“Respondents to the TRMS have consistently reported monthly improvements in their company outlook this year,” said Wes Miller, Senior Research Associate at the Texas Real Estate Research Center at Texas A&M (TRERC). “They’ve maintained that position amid a recent rebound in mortgage interest rates that has hindered both origination volumes and average values.”

The TRMS business-activity index notched five consecutive positive readings to start the year but stalled in June and July. Activity pulled back in the home-purchase segment of the market, but the refinance segment has yet to find its footing in the post-pandemic economy.

"The persistently high interest rate environment has continued to suppress the refinance market,” according to Erin Dee, Chief Operating Officer with LoanPeople LLC. “Over 90 percent of all homeowners have interest rates below 6 percent. With current 30-year fixed mortgage rates averaging 6.81 percent (Freddie Mac), there are very few incentives for homeowners to refinance their existing-home loans outside of opportunities to draw on their equity.”

The average value of refinance originations is expected to fall further during the second half of the year, but TRMS respondents anticipate a stabilization in rate-and-term origination volumes if mortgage rates tick downward.

“The Mortgage Bankers Association, however, expects interest rates to remain at elevated levels through 2023, keeping mortgage origination volumes dampened through spring 2024," Dee said.

The monthly survey is a collaborative effort between the Texas Mortgage Bankers Association and TRERC to provide contemporaneous analysis of changes and conditions in the residential mortgage industry.

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.​

COLLEGE STATION, Tex. (Texas Real Estate Research Center) – General business activity increased for Texas’ housing manufacturers for the fifth consecutive month in June, according to the latest Texas Manufactured Housing Survey (TMHS), and more momentum is expected to build during the second half of 2023.

The TMHS production and sales indices reached annual highs and accelerated heading into the mid-year mark.

“There was real concern from manufacturers about overstocked inventory on retail lots and the headwind of rising interest rates throughout the back half of 2022,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Demand for housing, however, remained resilient, and retailers posted strong sales so far this year.”

“Those sales have brought wholesale orders up for the past four months and have afforded manufacturers the ability to increase their capacity utilization and get their backlogs back to their preferred 4- to 12-week range,” continued Ripperda.

The TMHS backlog index reached an annual high in June, and respondents anticipate some additional increases over the next six months.

An uptick in supply-chain disruptions could have also contributed to the growing backlog, but upstream operations are expected to remain smooth after two years of pandemic volatility.

“Housing manufacturers predicted the improved business environment as early as November 2022, a period when higher interest rates had halted new orders and run rates,” according to Dr. Harold Hunt, research economist at the Texas Real Estate Research Center (TRERC). “As those predictions have played out, there is less uncertainty and ongoing optimism moving forward.”

Several forward-looking indices in the TMHS corroborated the positive outlook for the second half of the year, with manufacturers planning on payroll expansions and increased capital expenditures to keep pace with business activity.

All TMHA members with manufacturing facilities in the state were invited to participate in the sentiment survey, and the survey panel represents 89 percent of HUD-code homes produced in Texas.​

COLLEGE STATION, Tex. (Texas Real Estate Research Center) – In contrast to Texas’ manufacturing industry as a whole, the state’s housing manufacturers surged with confidence in May, according to the latest Texas Manufactured Housing Survey (TMHS). The business-activity and company-outlook indices increased for the fourth consecutive month to their highest levels since 2021.

New orders and production continued to rebound after last year’s correction.

“After a productive spring season, housing manufacturers expressed broad-based optimism for the second half of 2023,” said Wesley Miller, senior research associate at the Texas Real Estate Research Center (TRERC). “This sentiment stands out against other manufacturing subsectors, where faltering orders and activity have forced a more cautionary tone, according to the Dallas Federal Reserve’s Texas Manufacturing Outlook Survey.”

“Higher interest rates impact industries differently,” explained Dr. Harold Hunt, senior research economist at the TRERC. “For example, higher mortgage rates reduce housing affordability, and some prospective buyers leave the site-built market and enter the manufactured-housing sphere.”

In addition to the wave of new orders for manufactured homes, May marked the first uptick in sale prices for 2023. TRMS respondents expect prices to grow over the next six months, but that expectation includes the price of raw materials. Housing manufacturers also anticipate labor costs to increase, but they plan on expanding payrolls to expand production.

Supply chains have been stable, and respondents expressed an improvement in the overall level of uncertainty.

“The industry had to navigate through most of May with the uncertainty of whether the Department of Energy’s (DOE) Energy Conservation Standards for Manufactured Housing were going to take effect on the last day of the month as scheduled,” according to Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “The DOE published a proposed rule back in March asking for input on delaying the implementation, but confirmation of a later compliance date was not announced until May 19th, just 12 days before the changes were supposed to take effect.”

The TRMS reflected this development, with the regulatory-burden index holding firmly in positive territory, but its corresponding six-month-expectations iteration trended downward.

“Manufacturers will have to wait and see what the final compliance procedures will ultimately be, but once those rules are finalized, they will have 60 days to get their single-section production lines ready and until July 1, 2025, for their multi-section homes,” Ripperda said.

All TMHA members with manufacturing facilities in the state were invited to participate in the sentiment survey, and the survey panel represents 89 percent of HUD-code homes produced in Texas.

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.​