Manufactured Home Shipments Begin Rise in a Pricey Site-Built Home Market
Some Americans who have been priced out of the tight residential real estate market are turning to manufactured homes, helping to power a nascent recovery in sales of far less expensive home-buying options.
Shipments of manufactured homes were up for five months in a row through August, the most recent month for which data is available, according to the Census Bureau. They have risen by 7% to a seasonally adjusted annualized rate of 89,000 from 83,000 in March, (the lowest since May 2020).
A combination of high mortgage interest rates and high prices for both new and existing properties has put purchasing a home beyond the reach of many prospective home buyers. There appears to be boasting demand in the manufactured housing market, a sector that has lost market share in the past decade.
Elevated rates on home loans in response to the Federal Reserve’s rate-hike cycle have cut into buyer affordability, with average mortgage payment for a new home loan taken out in September costing 11% more than last year’s average of $1,941, according to the Mortgage Bankers Association. The average contract rate on a 30-year fixed rate mortgage rose to 7.90% last month, the highest in over two decades. “Mobile Home” Stigma Slowing Manufactured Home Acceptance
As of May, the most recent month for which data is available, the average price of a manufactured home was $129,900, according to Census data. Even after factoring in the cost of a typical building lot of nearly $110,000, a manufactured home comes in about 40% cheaper than new or existing site-built homes.
But even with such a large price differential, the manufactured home industry has struggled to regain market share after the 2007-2009 financial crisis due in large part to consumer concerns that the cheaper price point translates to lower quality “mobile homes” and “trailers”.
The “mobile home” stigma is pervasive, considering there have been zero mobile homes built in over four decades as a result of Congressional passage of a stringent building code, the HUD Code. Manufactured housing is the only form of housing regulated by a federal building code.
Today’s manufactured homes are at least equal and often superior to site-built homes in all the important aspects of home ownership, including; architectural styles, customization, energy efficiency, fire and wind safety and durability.
Sources: Reuters, U.S. Census Bureau, Mortgage Bankers Association
Want to know more? Check out our previous blog,
“TOP 10 WAYS A MANUFACTURED HOME CHECKS ALL THE BOXES FOR QUALITY AFFORDABLE HOMEOWNERSHIP”
