July 2018 Reports and August Preliminary Data

New titles for July extended the decline from May’s peak with a -1.1% decline from June’s total. Titles were pushed lower by a -4.1% drop in multi-section home sales, while single-section titles were up over the previous month by 1.7%. Both single-section and multi-section homes were up big over July of 2017 at a combined total of 1,217 homes, 34.5% higher than July of last year.

The top five counties for new installations were the same five from last month in just a slightly different order as Ector County jumped into second place with a 28.6% increase over last month. The rest of the counties all saw deeper declines than the state recorded.

Looking at the preliminary data for August the growth over 2017 looks set to continue with new homes tracking up 10.9% over July and a full 34.2% over August.

I wanted to take a moment to mention a potential uptick in sales prices that looks to have occurred in May. While I don’t have a perfect source for pricing data on MH sales, I do track the US Census Bureau’s Manufactured Housing Survey (MHS) results each month to try and gain some insight into what has happened to prices in the market. The MHS results have two significant drawbacks that has kept me from incorporating them more into our reports.

First, the monthly average pricing data is only broken out by Census region, so for our purposes that means Texas gets lumped into the South region which extends from Texas all the way up to Delaware. That’s a broad brush to paint with, although with Texas making up 18.7% of the nation’s total shipments, you can bet your boots we have a significant impact on those averages.

The second drawback to the MHS pricing data is that it is released with a significant lag. The most recent release is for May, a full two months behind our titling reports.

But despite the drawbacks it is the best proxy for sales prices in Texas that I currently have at my disposal, and it just indicated that prices could be moving up significantly this year.

Average sales prices for May moved up to a high of $56,300 for single-section homes in the South, and double-section homes were up to a high of $97,000. To put those numbers into perspective we can use the MHS Annual Data that is released at the beginning of summer for the previous year and does include average prices by individual state. The 2017 average price for single-section homes in Texas was $48,900 and the average price for a double-section home was $89,700. While it’s not exactly an apple to apple comparison, May’s single-section price for the region was 15% higher than it was for the state in 2017, and likewise double-section home prices for the region were up 8% over the state’s 2017 average.

The average sales price for single-section homes in the South prior to May, had been running around $47,900 for 2018, and around $90,325 for double-section homes. So, something certainly appears to have changed in the market that has effected prices on the average. May was a peak month for new titles in Texas, so a good old-fashioned demand curve should certainly be pushing prices upwards. Increased cost of materials should also be effecting prices, inputs to residential construction prices accelerated back in May and though they have since slowed, they remain up 5.2% for 2018 through September. The change in the average price could also be moving by a shift in sales towards higher-end models that occurred in the month of May, and that could either be a random shift that reverts to the 2018 mean, or the development of a longer-term trend.

While I can’t know for sure which of these factors is having the greatest impact on pricing, the shift caught my eye and it is something we will be monitoring and will continue to report on as the subsequent months pricing data becomes available. All the data we currently have points to a market that is still in expansion, so if prices have indeed moved up, it does not appear to be curtailing sales.