On background, as in ‘off the record’, the following information was obtained by MHProNews with a source familiar with the generation of these monthly reports from the Texas Real Estate Research Center (TRERC) in conjunction with the Texas Manufactured Housing Association (TMHA) and TMHA members. Per that source’s email to MHProNews on 9.7.2022 the following. “…The TMHS [Texas Manufactured Housing Survey] production index decreased in July and in August. Moreover, our product is a series of sentiment indices that may not always match the hard data. One example of this is that we tell manufacturers to compare production month to month after adjusting for seasonal factors (the latter of which may be interpreted differently by each respondent).” The reason that this is significant will be revealed following the TRERC media release to MHProNews. That report and analysis will in turn be followed by our Daily Business News on MHProNews REITs and stock report and market moving headlines from the left (CNN) and right (Newsmax).
With that brief tee up, let’s dive into their report which will be followed by additional information analysis and expert commentary.
FOR IMMEDIATE RELEASE
Sept. 6, 2022/News Release No. 01-0922
Texas’ manufactured-housing industry pulls back production as sales slide
COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Texas’ housing manufacturers slowed production for the second straight month, according to the latest Texas Manufactured Housing Survey (TMHS), as higher interest rates shocked demand and subdued sales. The slowdown spread through daily operations, prompting plant managers to shrink payrolls and reduce work weeks.
“Manufacturers have been shortening work weeks since May, but August marked the first month of a meaningful payroll contraction,” said Wes Miller, senior research associate for the Texas Real Estate Research Center (TRERC). “These adjustments have taken some pressure off of wages and salaries despite skilled-labor shortages.”
The TMHS labor-cost index decelerated into the single digits for the first time in series history (starting in June 2020), and other supply-side constraints moderated from pandemic peaks.
“Input prices are declining as supply chains continue to improve,” said TRERC Research
Economist Dr. Harold Hunt. “Lumber prices are a third of what they were six months ago, and shipping costs are falling. Many economists feel like inflation has peaked, but it’s still a long way back to the 2 percent target that the Federal Reserve is shooting for.”
The manufactured housing industry was cautiously optimistic regarding the supply chain, and some of the smoothing was likely caused by dampened demand across the economy. The price received for finished homes is expected to fall more than input prices over the next six months.
“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 August, a good share of manufacturers expects 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.” While ongoing capital expenditures corroborate the positive outlook in the long run, the rapid shift in demand over the past two months has elevated uncertainty and heightened concerns as the fourth quarter approaches.
Funded by Texas real estate licensee fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.
—30—
Additional Information with More MHProNews Related Analysis and Commentary
As was noted above, MHProNews spotted what may be an apparent factual disconnect between the claims being made by TMHA and its members and thus the report being produced by the TRERC. The specific disconnect? There report seems to indicate that production/shipments in Texas have declined for two consecutive months.
| Production | |||||
| State | SW | MW | Total | Floors | |
| Apr-22 | Texas | 1,226 | 1,106 | 2,332 | 3,450 |
| May-22 | Texas | 1,219 | 1,097 | 2,316 | 3,424 |
| Jun-22 | Texas | 1,341 | 1,201 | 2,542 | 3,759 |
| Jul-22 | Texas | 1,015 | 810 | 1,825 | 2,645 |
Growth in production for MHVille wasn’t achieved until the post-COVID19 pandemic was declared and the demand for single family housing initially soared, until interest rates on manufactured homes and other housing loans began to rise in 2022. It had essentially nothing to do with the Clayton Homes backed MHI branded CrossMods fiasco.
MHProNews did a follow up with the source that provided this quote. Once, more, this time with the entire relevant segment of the well placed off the record source quote above.
“He [Tony/MHProNews] is referring to our August TMHS, but the data he references only runs through July. The TMHS production index decreased in July and in August.
Moreover, our product is a series of sentiment indices that may not always match the hard data. One example of this is that we tell manufacturers to compare production month to month after adjusting for seasonal factors (the latter of which may be interpreted differently by each respondent).”
This was the bulk of the MHProNews follow up.
That is not sentiment. That says production. That is not what the facts reflect. Again, to put this all in a single email for the ease of all in the loop:
There was a slight dip April to May. There was a significant drop June into July (the most recent month that IBTS/HUD data is available.
Now, perhaps your researcher has hard data for August production by Texas HUD Code builders? If so, then why not produce that data as part of the report? Wouldn’t that make it more informative?
I’d value clarity on the notion that TRERC has (or does not have) precise figures for August production from all Texas HUD Code MH producers?
But then, the reply from your researcher also said:
“Moreover, our product is a series of sentiment indices that may not always match the hard data. One example of this is that we tell manufacturers to compare production month to month after adjusting for seasonal factors (the latter of which may be interpreted differently by each respondent).”
With all due respect a SAAR is something the FED or national housing data providers use for rather technical reasons. If your own researcher thinks that such a seasonally adjusted factor may be “interpreted” differently by different people, that at a minimum implies that the information may not be factually accurate.
Help me, help you, help the industry to get clarity on these issues, please. To recap:
- Now, perhaps your researcher has hard data for August production by Texas HUD Code builders?
1a) I’d value clarity on the notion that TRERC has (or does not have) precise figures for August production from all Texas HUD Code MH producers
- If so, then why not produce that data as part of the report? Wouldn’t that make it more informative?
- That is not sentiment. That opening line says production “Texas’ housing manufacturers slowed production for the second straight month…”
To add some color from a publicly traded firm that includes Texas production that I referred to previously, this from Cavco’s CEO Bill Boor in their last earnings call. It will give you and your colleagues additional data that is supposed to be accurate at the time it is shared by a public firm.
Certainly, some would-be buyers are getting priced out of ownership in the near-term, however, they still need homes. Community operators, who continue to have aggressive growth plans, are providing a solution with single-family manufactured housing rental homes.
…
So, shipments are strong. There are still some constraints in retail and placing homes. And that’s kind of caused a continuation of the inventory back up at retail. So — and it’s hard to give you a great feel for the numbers. I would say that orders are certainly off the highs that we’ve been experiencing, but they’re probably more on a par with kind of pre-pandemic levels with appropriate seasonality.
So, we feel pretty good about it. The one thing I mentioned in my comments that I think is an important point to get as people are trying to gauge the health of the market. I view that the strong retail traffic is still a positive, even if we’re going through a little bit of an adjustment with the retail inventories.
…Yes. That’s — I mean, communities are a real source of strength right now. I haven’t seen any sitting on the hands with regard to the communities, they’re still looking to get more homes. We’ve talked to this in the past, if you — just a little bit of the history because I think it’s important.
…The communities still have very aggressive growth plans. They’ve got capital behind them. They’re not as sensitive in their purchasing to the interest rate changes that we’ve seen. And tried to make this point in my comments as well, they’re really a solution to what is going on for the buyer, right?
As mortgage rates and the monthly cost of buying have really gone up and made it very difficult for some people to purchase. The communities are very heavily into the rental business and so they’re buying manufactured homes, placing them in the communities for rent.
And that’s a solution for that family that can’t purchase but still needs a home. So, I really expect communities to be a source of strength for the business going forward, and they’re not showing any signs of slowing down that I see. …”
During an earnings call, as I remember, made it sound like any drop off from retailers was being picked up by communities. The above doesn’t quite say that, but it is close to it.
Part of my point is this. Knowing that communities are to some degree picking up the retail slack, why would producers mind a drop at the retail order level if MHCs are making up the difference?
Do you see the logical questions that such facts and apparently competing claims raise?”
That well-placed source that facilitated the previous quoted statement on background replied as follows.
“Tony:
Yes. I see your points. Well stated.”
Note that some of the inquiries were not responded to, but the polite reply and the “Well stated” speaks volumes.
Those questions are thus apt for inquiry for publicly traded firms, TRERC, TMHA, MHI, and their dominating brands, regulators or public officials. Why the later? Because an attorney tells us that there are antitrust, market manipulation, and other possible issues involved. While the Cavco-SEC issue is reportedly winding down, that is not yet set in stone. The Cavco/Boor remarks are from the source linked below.
Additional information relevant to this discussion is found in the latest September 2022 report on July manufactured home production and shipment facts.
Stay tuned to the one and only industry trade source that tracks the facts, asks the evidence-based questions, and seeks to continue to shine a light on those who need to be held accountable for their actions and inactions.
Daily Business News Markets Segment
NOTICE: Based on feedback, a modification of our Daily Business News on MHProNews recap of yesterday evening’s market report is provided. It will still include our left (CNN Business) and right (Newsmax) ‘market moving’ headlines. The macro market moves graphics will provide context and comparisons for those invested in or tracking manufactured housing connected equities.
Reminder: several of the graphics on MHProNews can be opened into a larger size. Click the image and follow the prompts in your browser or device to OPEN In a New Window. Then, in several browsers/devices you can click the image and increase the size. Use the escape or back key to return.
Headlines from left-of-center CNN Business – from the evening of 9.7.2022
- Oil tumbles
- NEW JERSEY, USA – MAY 11: An aerial view of Phillips 66 oil refinery is seen in Linden, New Jersey, United States on May 11, 2022.
- Prices dropped sharply to $82.41, deepening a selloff that has brought relief at the gas pump
-
As the 2020 midterms draw closer, Biden and Democrats are attempting various efforts to stir up their base and encourage or ‘buy’ votes, such as through the constitutionally questioned student loan forgiveness plan. Democratic House Speaker Nancy Pelosi previously said the plan would require Congressional approval. What happened to that? Who died and made Biden a ruler by fiat? Joe Biden and some of his admin officials announced inflation is ‘zero percent’ for the prior month. What? Who believes that who is going to the grocery store? It was running at 9.1 percent the previous month, but many believe that the actual rate of inflation is about double that claim. Yes, gas prices have fallen, due to an apparent drop in global demand as an economic slowdown is taking place. The Washington Examiner said that a historic record 88 percent now thinks that the U.S. is on the wrong track under Biden. As the value of the dollar erodes, that impact should be considered when looking at stock market performance. Note: depending on your browser or device, many images in this report can be clicked to expand. Click the image and follow the prompts. To return to this page, use your back key, escape or follow the prompts. LIVE UPDATES Apple unveiled the new iPhone 14, and updates to the rest of its products
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- Apple Watch Series 8.
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- WORKERS’ RIGHTS
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- (AP)
- Raid on Trump’s Mar-a-Lago
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- Trump Attorney Habba: ‘Impressed’ With Ruling for Special Master | video
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“In the business world, the rear-view mirror is always clearer than the windshield.” – Warren Buffett. That begs a key question. Why don’t more people LOOK at the rearview mirror so they can learn more about the patterns that influence what’s ahead? Note: depending on your browser or device, many images in this report can be clicked to expand. You may need to click on an image to open in a new window and then click to expand it. Click the image and follow the prompts. To return to this page, use your back key, escape or follow the prompts. Document Seized at Trump Home Described Foreign Govt’s Nuke Capabilities: Wash Post
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- Fox News Host Speculates Trump Was Selling Classified Documents to Russia
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##
- NOTE 1: The 3rd chart above includes the Canadian stock, ECN, which purchased Triad Financial Services, a manufactured home industry lender
- NOTE 2: Drew changed its name and trading symbol at the end of 2016 to Lippert (LCII).
- NOTE 3: Deer Valley was largely taken private, say company insiders in a message to MHProNews on 12.15.2020, but there are still some outstanding shares of the stock from the days when it was a publicly traded firm. Thus, there is still periodic activity on DVLY.
- Note 4: some recent or related reports to the equities named above follow.
2022 …Berkshire Hathaway is the parent company to Clayton Homes, 21st Mortgage, Vanderbilt Mortgage and other factory-built housing industry suppliers.
· LCI Industries, Patrick, UFPI, and LP each are suppliers to the manufactured housing industry, among others.
· AMG, CG, and TAVFX have investments in manufactured housing related businesses. For insights from third-parties and clients about our publisher, click here.
Disclosure. MHProNews holds no positions in the stocks in this report.
· For expert manufactured housing business development or other professional services, click here.
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That’s a wrap on this installment of “News Through the Lens of Manufactured Homes and Factory-Built Housing” © where “We Provide, You Decide.” © (Affordable housing, manufactured homes, stock, investing, data, metrics, reports, fact-checks, analysis, and commentary. Third-party images or content are provided under fair use guidelines for media.) (See Related Reports, further below. Text/image boxes often are hot-linked to other reports that can be access by clicking on them.)
By L.A. “Tony” Kovach – for MHProNews.
Tony earned a journalism scholarship along with numerous awards in history. There have been several awards and honors and also recognition in manufactured housing. For example, he earned the prestigious Lottinville Award in history from the University of Oklahoma, where he studied history and business management. He’s a managing member and co-founder of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com. This article reflects the LLC’s and/or the writer’s position and may or may not reflect the views of sponsors or supporters.
