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Manufactured Homes: An Alternative Means of Housing Supply

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Manufactured homes play a measurable role in the U.S. housing market by providing an affordable supply option for millions of households. According to the American Housing Survey (AHS), there are 7.2 million occupied manufactured homes in the U.S., representing 5.4% of total occupied housing and a source of affordable housing, in particular, for rural and lower income households.

Often thought of as synonymous to “mobile homes” or “trailers”, manufactured homes are a specific type of factory-built housing that adheres to the U.S. Department of Housing and Urban Development’s (HUD’s) Manufactured Home Construction and Safety Standards code. To qualify, a manufactured home must be a “movable dwelling, 8 feet or more wide and 40 feet or more long”, constructed on a permanent chassis.

The East South Central division (Alabama, Kentucky, Mississippi and Tennessee) have the highest concentration of manufactured homes, representing 9.3% of total occupied housing. The Mountain region follows with 8.5%, while the South Atlantic region holds 7.7%.

The 1990s saw a surge in manufactured home shipments, peaking in 1998. During this period, manufactured homes constituted 17% to 24% of new single-family homes.  However, shipments declined in the early 2000s, coinciding with a rapid increase in site-built housing construction leading up to the 2008 housing crisis. Since then, manufactured homes have stabilized at around 9% to 10% of new housing.

Characteristics of the 2023 Manufactured Home Stock

Given that most manufactured homes were produced in the 1990s, a significant portion of the existing manufactured home stock — approximately 72.2% — was built before 2000. Consequently, 7.7% of these homes are classified as inadequate compared to 5% of all homes nationwide. About 2% are considered severely inadequate and exhibit “major deficiencies, such as exposed wiring, lack of electricity, missing hot or cold running water, or the absence of heating or cooling systems”. However, with proper maintenance, manufactured homes can be as durable as site-built homes.

Currently, 57% of the occupied manufactured homes stock are single-section units, while 43% are multi-sections, according to the AHS. Single-section homes are manufactured homes that can be transported from factory to placement in a single piece while multi-sections are transported in multiple pieces and are joined on site. However, data from the Census show that newer shipments indicate a shift toward multi-section homes.

Most single-section homes are less than 1,000 square feet and contain five total rooms in the house — typically two bedrooms and three bathrooms. In contrast, multi-section homes usually range from 1,000 to 2,000 square feet and have six rooms, comprising three bedrooms and three bathrooms.

Demographics of Manufactured Homes Residents

Manufactured homes serve as a crucial housing option, particularly for those living in rural or non-metro areas. AHS data highlight a stark contrast between the locations of single-family and manufactured home residents. While most manufactured home residents (53%) live in rural areas, single-family residents are mostly concentrated (67%) in urbanized areas — defined as territories with a population of 50,000 or more. In comparison, only 33% of manufactured home residents reside in urbanized areas. Residents of both manufactured and single-family homes are less common in urban clusters — areas with populations between 2,500 and 50,000 — comprising just 13% and 9%, respectively.

The median age of a manufactured home householder is 55, the same as single-family householders. However, most manufactured home householders (37.8%) have an education attainment level of high school completion compared to single-family householders whose largest group (24.8%) have completed a bachelor’s degree.

Income disparities are also significant. The median household income for manufactured home residents is $40,000, far below the $85,000 median income for single-family householders. The gap widens among homeowners, with manufactured homeowners earning a median of $41,500 versus $93,000 for single-family homeowners.

Household CharacteristicManufactured Homes HouseholdSingle-Family HouseholdAge (Median)5555Majority Education Attainment LevelHigh school or equivalency (37.8%)Bachelor’s degree (24.8%)Annual Household Income (Median)$40,000$85,000Annual Household Income of Homeowners (Median)$41,500$93,000Sources: 2023 American Housing Survey (AHS) and NAHB analysis.

Cost of Buying and Owning Manufactured Homes

One of the key advantages of manufactured homes is affordability. The average cost per square foot for a new manufactured home in 2023 was $86.62, compared to $165.94 for a site-built home (excluding land costs) — a difference of $79.32 per square foot. This difference in cost has only grown over the decade from $51.84 per square foot in 2014. For a 1,500-square-foot home, this translates to a savings of approximately $118,980, and this savings has grown despite the average cost of manufactured homes increasing at a higher growth rate of 7.4% CAGR versus 6.1% CAGR for new single-family homes.

Owning a manufactured home is also more affordable in total housing cost, which includes mortgage payments, insurance, taxes, utilities and lot rent. According to the AHS, owners of a single-section manufactured home have a median total monthly housing cost of $563, while the cost for a multi-section home is $805. In contrast, the median monthly cost of owning a single-family home is $1,410.

Despite the lower costs associated with manufactured homes, affordability remains a challenge for many owners. Among single-section manufactured homeowners, 36.6% are considered cost-burdened, meaning they spend 30% or more of their income on housing. This is slightly higher than the 28.4% of multi-section manufactured homeowners and the 27.6% of single-family homeowners facing similar financial strain. This disparity underscores the reality that even though manufactured homes are a more affordable option, lower-income households are still disproportionately burdened by housing costs.

Manufactured Home Pricing

Data on manufactured home appreciation is limited. However, the Federal Housing Finance Agency (FHFA) publishes a quarterly house price index for manufactured homes. Comparing the indices for manufactured and site-built homes, manufactured homes have closely followed the appreciation trends of their site-built counterparts. Between the first quarter of 2000 and the last quarter of 2024, the index value for manufactured homes increased by a cumulative 203.7%, slightly surpassing the 200.2% increase for site-built homes. This indicates that the manufactured home markets face much of the same demand opportunities and supply challenges of the broader housing market.

It is important to note that this data reflects only manufactured homes financed through conventional mortgages as real property, acquired by Fannie Mae and Freddie Mac (the Enterprises). In contrast, the majority of new manufactured homes are titled as personal property, which is not eligible for conventional mortgage financing because the Enterprises do not acquire chattel loans. Nonetheless, it is common for manufactured homes to be placed on private land even though the unit is under a personal property title — a title that applies to movable assets, such as vehicles, tools or equipment, and furniture, whereas a real estate property title includes land and any structures permanently attached to it.

Despite this distinction, there has been a steady increase in the share of manufactured homes titled as real estate. Since 2014, the percentage of real estate-titled manufactured homes has grown from 13% to 20% in 2023, indicating a positive trend toward greater financial recognition and stability for these homes.

Zoning Restrictions and the Future of Manufactured Homes

Manufactured homes provide a cost-effective housing solution, particularly in rural areas where the transportation and material costs for site-built homes can be significantly higher. However, restrictive zoning laws often limit their placement in urban areas. Regulations such as bans on manufactured home communities and large lot size requirements can substantially increase costs, making it difficult to establish manufactured housing in cities. Reducing these zoning barriers could not only expand affordable housing options in high-cost urban areas but also improve access to essential services such as healthcare and economic opportunities for lower-income communities.

A successful example of zoning reform comes from Jackson, Mississippi, where city officials partnered with the Mississippi Manufactured Housing Association (MMHA) to launch a pilot program highlighting the potential of prefabricated and manufactured homes as affordable housing solutions. As part of the initiative, the city revised its zoning regulations to distinguish manufactured and modular housing from pre-1976 “mobile homes,” which had long been banned. Previously, manufactured homes were classified under the same category, restricting their placement. The new ordinance now permits manufactured housing within city limits, albeit with a discretionary use permit, paving the way for greater affordability and accessibility in urban housing.

Conclusion

Manufactured homes make up only 5% of the total housing stock but provide an alternative form of housing that meets the needs of various households, particularly in rural areas. Although they offer a lower-cost option compared with site-built homes, factors such as an aging housing stock, financing limitations and zoning restrictions could influence their accessibility and long-term viability.

Trends such as the increasing prevalence of multi-section homes and a growing share of units titled as real estate suggest a gradual shift in consumer preferences toward housing options that more closely resemble site-built homes in size, functionality and financing. As housing affordability remains a key concern, manufactured homes continue to play a role as an affordable supply in the broader housing landscape, and expanding their use through education, innovation and zoning reform could improve access to cost-effective housing.

Footnotes:

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Top Posts – Considering Housing Inventory: Why Both New and Existing Supply Matters

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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In June, Chief Economist Rob Dietz highlighted the importance of both new and existing home inventory in understanding housing market dynamics, emphasizing that while rising inventory may signal price moderation, the current low levels of resale homes still support home construction and price growth.

Total (new and existing) home inventory is an important measure for gauging and forecasting home prices and home construction impacts. The intuition is clear: more inventory yields weaker or declining home price growth and home building activity. Lean inventory levels lead to price growth and gains for home building.

The metric “months’ supply” is a common measure of current market inventory. For both new and existing home markets, months’ supply converts inventory from a count of homes into a measure of how many months it would take for that count of home inventory to be sold at the current monthly sales pace.

Housing economists typically advise that a balanced market is a five- to six-months’ supply. Larger inventory levels than this benchmark risk producing deteriorating conditions for price growth and building activity.

In the Census May 2024 newly-built home sales data, the current months’ supply of inventory is 9.3. Some analysts have noted that, given the five- to six-month benchmark, that this means the building market for single-family homes is possibly oversupplied, implying declines for construction and prices lie ahead.

However, this narrow reading of the industry misses the mark. First, it is worth noting that new home inventory consists of homes completed and ready to occupy, homes currently under construction and homes that have not begun construction. That is, new home inventory is a measure of homes available for sale, rather than homes ready to occupy. In fact, just 21% of new home inventory in May consisted of standing inventory or homes that have completed construction (99,000 homes).

More fundamentally, an otherwise elevated level of new home months’ supply is justified in current conditions because the inventory of resale homes continues to be low. Indeed, according to NAR data, the current months’ supply of single-family homes is just 3.6, well below the five- to six-month threshold. It is this lack of inventory that has produced ongoing price increases despite significantly higher interest rates over the last two years.

Taken together, new and existing single-family home inventory, the current months’ supply of both markets is just 4.4, as estimated for this analysis. This is admittedly higher than the 3.6 reading, using this approach, from a year ago, but it still qualifies as low. See the following graph for total months’ supply going back to the early 1980s using data from the NAR existing home sales series and the Census new home sales data, as calculated by NAHB.

Yes, inventory is rising and will continue to rise, particularly as the mortgage rate lock-in effect diminishes in the quarters ahead. But current inventory levels continue to support, on a national basis, new construction and some price growth, per this current reading of total months’ supply.

Further, the housing deficit (NAHB estimates about 1.5 million homes), which was produced by a decade of underbuilding due to a perfect storm of supply-side challenges, has generated a separation in the normally co-linear measures of new and existing home months’ supply. This separation became particularly pronounced during the COVID and post-COVID period of the housing market. June 2022 recorded the largest ever lead of new home months’ supply (9.9) over existing single-family home months’ supply (2.9). This separation makes it clear that an evaluation of current market inventory cannot simply examine either the existing or the new home inventory in isolation.

With the current total months’ supply at 4.4, what does this mean for the market, particularly with respect to pricing and construction trends? To examine this question, I calculated the total months’ supply reported on the first graph in this post. I then examined price movements and single-family construction starts data with respect to current total months’ supply. The results are broadly consistent with the existing rules of thumb regarding market conditions.

The horizontal axis plots total months’ supply for monthly data going back to the start of 1988 (the starting point of the price data used for this analysis). The vertical axis records the corresponding year-over-year home price growth for the same month as measured by the Case-Shiller Home Price Index. The trend line is estimated using a simple linear regression. The statistical correlation indicates that home price growth, on average, turns negative when inventory reaches an 8-months’ total supply (on the graph, the trend line intersects the horizontal axis, measuring zero percent price growth, at 8 months’ supply).

To be clear, this does not mean that prices will not fall until months’ supply exceeds eight. For example, 24% of the data registering 6.5 to 7.5 months’ supply recorded home price declines. For the data in the range of 7.5 months’ supply to less than 8 months’ supply, this share increased to 36%. Overall, for months with less than an eight months’ supply, it was less likely than not to see home price declines, but it did happen in certain market conditions.

And to be complete, home prices did not always fall when total inventory was greater than an eight months’ supply. For example, for months with a months’ supply measure of 8.5 to 9.5, homes prices increased 36% of the time.

Taken together, these general trends indicate that a months’ supply of less than eight has historically been positive for nominal home price growth. That’s where market conditions are today.

What about impacts for single-family home building? The data are little less clear (as seen by smaller R-squared measures on the trends), but this should not be a surprise. Home building is a function of both demand-side housing factors, like mortgage interest rates, as well as volatile supply-side variables like the cost and availability of labor, lots, lending, lumber/materials, and legal/regulatory policies and fees. Nonetheless, using Census housing starts data and the same total months’ supply metric, a trend is apparent, and it is one that matches up well with existing rules of thumb.

As the chart above indicates, a simple linear trend of monthly data going back to mid-1982 (the limit of the supply data) indicates that at roughly 6-months’ total home inventory, single-family home building reaches a zero percent year-over year growth rate. As before, and as seen in the graph above, the correlation is not absolute.

For example, for otherwise tight 4.5 months’ to 5.5 months’ new and existing home supply, single-family home building did contract 27% of the time. On the other hand, for markets with more inventory than the benchmark (6.5 to 7.5 months’ supply), home building expanded 30% of the measured months. As with home prices, the trend is not absolute, but the six-months’ supply benchmark is a useful rule of thumb for examining whether builders will reach a neutral stance for expanding home construction activity.

It is worth noting that home builder production can occur with a lag with respect to inventory conditions. For example, the time between permit approval and the start of construction was approximately 1.3 months in 2022 (2023 data will be available in the coming months). And single-family construction time averaged 8.3 months, per NAHB estimates using Census data. Mindful of these lags, I examined the impact of total months’ supply on single-family starts with both a three-month and six-month lag. In both analyses, the 6-months’ benchmark was again validated. For a relatively straightforward analytical approach, this represents a fairly robust result, albeit one with a notable amount of statistical noise due to supply-side factors associated with construction inputs and constraints.

The data thus show that current market conditions are unusual, with a large gap between new and existing single-family months’ supply. Analyses that rely on just one of these measures will be misleading. A total months’ supply measure that measures both new and existing inventory is required to gauge the status of inventory conditions and possible impacts on home prices and home building.

Furthermore, the historical correlations suggest that home builders will significantly slow home building activity at a 6-months’ supply of total housing inventory. And price declines become more likely than not at an 8-months’ supply.  

In the meantime, builders, housing stakeholders, and analysts should view the current nine months’ supply for new homes within its proper context. This will be particularly important as resale levels continue to rise, with additional gains expected to occur as the mortgage-rate lock-in effect diminishes in the quarters ahead. However, keep in mind, lower mortgage rates will also unambiguously improve housing affordability conditions and price prospective home buyers back in the market, thus putting downward pressure on the months’ supply metric by increasing sales rates.

With each Census new home sales report, NAHB will continue to estimate and watch the total months’ supply measure. But given this analysis, at 4.4 total months’ supply, inventory levels have increased but remain low and supportive of limited gains for home building and upward pressure on nominal home prices.

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Home Sizes: Demand versus Supply

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The share of new single-family homes built in the 1,600-3,000 square-foot range closely matches the share of buyers who want homes of that size, according to recent surveys from NAHB and the U.S. Census Bureau. The surveys show that 21% of buyers want homes with 1,600 to 1,999 square feet, and 22% of new single-family homes started in 2023 have that much floor space. In the next tier up, 38% of buyers want homes with 2,000 to 2,999 square feet, and 40% of new single-family homes fall within that size range.

Results on the square footage buyers want in their next home were published in the 2024 edition of What Home Buyers Really Want, based on a representative sample of 3,008 recent and prospective home buyers conducted in 2023. The size of homes started comes from NAHB tabulation of the recently released 2023 data file from the Census Bureau’s Survey of Construction.

Outside of the 1,600-3,000 square-foot range, the match between what buyers want and what builders provide is not as close. While 26% of buyers want homes under 1,600 square feet, only 16% of single-family homes started in 2023 were that small. And while 22% of new homes have at least 3,000 square feet, only 14% of buyers are looking for homes that large.

Part of the reason for the apparent mismatch, of course, is that builders are compensating for the existing stock of housing, much of which was built decades ago when homes tended to be smaller. According to the latest American Housing Survey (funded by HUD and conducted in odd-numbered years by the Census Bureau), a full one-third of existing homes in the U.S. have less than 1,500 square feet of floor space. Moreover, the median size of an existing single-family detached home is 1,800 square feet, compared to 2,200 square feet for single-family homes started in 2023 and the 2,067 square feet that home buyers say they want in the NAHB survey.

In other words, the median buyer wants a home that is 133 square feet smaller than the median new single-family home, but still 267 square feet larger than the median existing single-family detached home.

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