COLLEGE STATION, Tex. (Texas Real Estate Research Center) –Production of manufactured homes increased for the sixth straight month and shows no signs of slowing despite worsening bottlenecks in the supply chain and contractions in the pool of skilled labor, according to the latest Texas Manufactured Housing Survey (TMHS).
“A backlog of ships has built up at the ports of Los Angeles and Long Beach despite efforts to increase container flow,” said Dr. Harold Hunt, research economist at the Texas Real Estate Research Center at Texas A&M University (TRERC).
However, Hunt said the more critical problem is the lack of truck drivers. The American Trucking Association reports a record shortage of drivers, with recent estimates of 80,000 unfilled jobs.
“A number of factors are at play for the shortage, including the retirement of older drivers, a lack of female drivers, and higher demand for time at home,” Hunt said. “As a result, bottlenecks at ports are expected to continue well into next year.”
TMHS respondents unanimously experienced rising raw-material costs, resulting directly from upstream supply issues.
The manufactured-housing industry struggled similarly on the employment front, with labor-supply contractions occurring during the economic recovery. Manufacturers have expanded payrolls throughout the COVID-19 pandemic but have been forced to raise wages to attract qualified workers, said Hunt.
“Constraints on the supply-chain and labor fronts will transmit into higher prices for finished homes during a period of waning housing affordability,” he said.
“With the median home price in Texas surpassing $300,000 this year, manufactured housing is positioned to provide quality homes well below that price in markets where their placement isn’t restricted by local zoning,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “Manufacturers, however, are not immune to the rise in lumber prices that has occurred over the past three months, and with the Department of Commerce announcing the doubling on tariffs on Canadian softwood lumber next year, additional price pressure is in store.”
Talk of tariffs and proposed changes to energy-efficiency requirements contributed to a higher reading in the TMHS’ regulatory burden index, said Ripperda. These factors combined with other challenges surrounding the COVID-19 pandemic to worsen the level of uncertainty across the industry.
“Demand projections, however, remain favorable, and manufacturers’ six-month outlook improved after dipping last month, prompting additional plans of investment and capital expenditures,” he said.
Source: Texas Real Estate Research Center. The TRERC is part of Mays Business School at Texas A&M University.