As my colleague, Joe Bramhall, pointed out last week, manufactured home building is among the top-growing industries for 2013. Output for manufactured housing manufacturing will be up by 16 percent, compared to 2012, according to the latest First Research forecast by INFORUM. That’s a dramatic turnaround for an industry that saw drastic losses during the recession from 2005 through 2010.
Affordability is probably one of the main drivers for demand in the manufactured housing industry. Consumers who opt to buy rather than rent may be among the thousands of people who consider a factory-built home as an affordable option. The average sales price for a manufactured home in the US is $60,600, and manufactured homes can cost 10 to 20 percent less per square foot than a site-built home, according to the Manufacture Housing Institute.
Oil and natural gas booms in places such as North Dakota and Texas also have helped create a demand for manufactured and modular homes. And new financing standards for manufactured homes could help reduce the number of defaults on loans by making mortgage terms more affordable. This could propel even more demand in the industry.
Although things are improving for the manufactured housing industry, it’s good to consider exactly where the industry is coming from. Shipments and sales are still nowhere near pre-recession numbers. In 2011 more than 51,000 manufactured homes were shipped (compared to 50,000 the year before). However, more than 146,000 were shipped in 2005. And the industry hit its peak in 1999, when more than 372,000 homes were shipped in the US.
While Major manufactured home builders are reporting increased sales (Cavco just reported a 20 percent jump in its latest quarterly filing), things still aren’t perfect. Companies continue to battle high unemployment, low consumer confidence, and competition.