MANUFACTURED HOME WAIT TIMES IMPROVE AS SALES SEASON BEGINS AMID INFLATION CONCERNS
The manufactured home market is entering its hot season after a year of high demand and national supply challenges, according to a report by the Victoria Advocate (Texas).
As demand for the manufactured home increased and stayed high during the pandemic, the difficulty for builders to supply new homes to the market caused backlogs for customers that continued to grow, said Rob Ripperda, vice-president of operations at the Texas Manufactured Housing Association.
Access to materials caused many businesses to experience supply chain bottlenecks and labor shortages. As those supply chains begin to readjust, the time an average customer might wait for a manufactured home to be shipped to the home site has hit its anticipated ceiling.
Before the pandemic, wait times would typically be 6 to 8 weeks. Now backlogs are on average about six months and are expected to shorten over the next few months. At the height of the pandemic wait times for customer-sold factory-ordered homes were from 8 to 9 months, or in some instances longer, said A-1 Homes General Manager Jacob Ricossa.
In December and January, manufacturers built manufactured homes at their highest production rates in 10 years, Ripperda said.
“I think everyone has been concerned about (source material problems) being a limiting issue,” Ripperda said. “They just kind of keep crawling and scraping and made it through and made it work.”
Despite supply challenges, Ripperda said statewide (Texas) sales have remained higher each month since May compared to what they were the previous year.
As supply goes down and demand goes up, prices have been able to climb as well. “Despite this, many customers don’t bat an eye at the new prices,” said Ripperda.
The high sales season for manufactured homes stretches from about March through the summer to August, with a dip around July Fourth, Ricossa and Ripperda said.
Home Builders Concerned About Prospect of Resurgent Inflation
Investors are fretting over inflation. Scores of U.S. companies are saying they are right too, according to a report by Financial Post.
A growing list of businesses, including home builders, are warning that supply chain bottlenecks, increasing raw material costs and higher labor expenses are beginning to bite.
Homebuilding (including manufactured housing) is one of the industries that is jittery about the inflation resurgence. Aluminum, copper, oil, and lumber prices have all surged in recent months, with lumber trading near all-time highs. Surveys from regional branches of the U.S. Fed has shown manufacturers are penciling in large commodity price increases over the next six months.
“Every commodity that we buy, or many of the commodities we buy, we’re having price increases,” Curtis Drew Hodgson, the co-founder of Legacy Homes, told investors. “We’ve even had to give labor increases because just to get people to come to work, we pay them US $1 an hour more if they just come to work, in addition to their wage.”
Jay Powell, the Fed chair, has so far dismissed rising prices, expecting them to be transient and likely to fade as the recovery persists. He told Congress last week that policymakers saw the resulting impact on inflation as “neither particularly large nor persistent.”
Some investors are reluctant to agree so quickly.