July Manufactured Home Shipments and Sales Still on Pace for Record Setting 2022
Affordable housing in the conventional site-built sense is disappearing as a result of rampant inflationary pressures, escalating home mortgage rates, and post-pandemic supply chain issues. There are numerous economic specialists that believe we have entered a recession. There are those officials in the federal government who refuse to accept that assumption.
That being said, home buyers are discovering that today’s quality affordable manufactured housing will meet the criteria for “everything a home should be,” and can be half the price, and will be at least equal, and often superior, in every respect to a site-built home. That dynamic is unlikely to change.
“Shipments” And “Sales” Not “One-In-The-Same”
During and in the aftermath of Covid 19, manufactured home production and shipments have increased month over month in 2021 and for the first six months of 2022. In fact, the number of shipments in 2021 was the most in over 15 years. In July, the shipment and production of manufactured homes dipped well below the numbers reported in June.
Why have shipments declined temporarily? First of all, manufactured home shipments do not necessarily equate with home sales, although history tells us that shipments prior to Covid 19 were considered to be a reflection of the number of homes sold. That assumption does not seem accurate as we enter a post-pandemic home market with still-existing economic headwinds.
Over the last 16 to 18 months, manufacturers have been producing manufactured homes at a record pace, with backlogs of orders stretching out from 7-8 months to a year. Under normal conditions, most manufactured home shipments of customer-ordered homes would be from 4 to 6 weeks.
It is rare that a manufactured home buyer would wait multiple months for their home to be built. Retailers also could not exist waiting months to close transactions waiting for those homes to be produced. Many of those orders were canceled by customers before they went online for construction.
In normal business conditions, a typical retailer will inventory 4 to 6 display models at their sales center that are representative of the homes they offer for sale, with customers ordering their purchased home from the factory.
With the bloated backlogs, it was necessary for manufacturers to allocate a number of produced unsold inventory homes periodically to retailers to maintain sales activity, thus conflating shipments and reported sales statistics. Retailers often were doubling the number of homes normally inventoried at their sales centers. In other words, many of the homes produced over the last several months were actually shipped and sold to retailers to be subsequently sold to homebuyers.
Retailers Still Selling Homes At Historically High Levels
“Across most of the indicators in this month’s survey, the future sentiment is more moderate than current readings,” said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association. “While everybody downshifted during July and August, a good share of manufacturers expect to keep running at their current production rates as we head into next year. Retailers reached a point where they needed to lower their order volumes, but they’re still selling homes at historically high levels, just not with the same amount of year-over-year gains.
Following is a brief summary of MHI’s Monthly Economic Report for Shipments in July 2022
8,043 New HUD-Code Homes Shipped in July
In July 2022, 8,043 new manufactured homes were shipped, a decrease of 3,329 homes or 29.3 percent compared to June 2022, an increase of 479 homes or 6.3 percent compared to July 2021. Compared with the same month last year, shipments of single-section homes were both up 14.7 percent and 0.7 percent. respectively. Total floors shipped in July 2022 were an increase of 4.1 percent compared with the same month last year.
Cumulative shipments for January through July this year totaled 69,693 homes compared with 61,326 homes in the same seven months of 2021, a net increase of 13.6 percent.