Manufactured home construction stands at a severely depressed level, disproportionately constraining the supply of affordable housing, Fannie Mae said in its latest Housing Insights report.
While overall home construction plummeted by 70 percent between 2006 and 2011, manufactured home construction continued along a descent that began in 1998, according to the report.
Fannie Mae said since hitting a high of 374,000 units that year, manufactured home construction has nosedived by nearly 90 percent due largely to a drop-off in credit availability for manufactured housing. In 2012, manufactured home production accounted for just 7.4 percent of total housing construction, down from 20.2 percent in 1998, Fannie Mae reported.
“Given manufactured housing’s modest share of the total housing stock, the decline in manufactured home production might not seem important. However, manufactured homes account for an outsized share of low-cost housing, particularly among owner-occupants,” the report said. “Whereas manufactured homes account for approximately 7 percent of all owner-occupied homes, they represent 16 percent of owner-occupied units with monthly housing costs of less than $500.”
In 2012, the average price per square foot of a new manufactured home was about $42, less than half the per-square-foot cost of a new site-built single-family structure, excluding land, Fannie Mae said.
To reverse its decline, Fannie Mae said the manufactured housing industry would have to overcome a number of obstacles including:
- competition from distressed sales of site-built single-family homes.
- historically low interest rates and record affordability for site-built homes.
- limited conventional financing options due to titling of most manufactured homes as personal property.
- an underdeveloped secondary market for manufactured home loans.
- pending financial regulations that could further curtail manufactured home lending.