Manufactured housing industry in Texas showing early indications of deflation

The manufactured housing industry in Texas is currently exhibiting early indications of deflation, with manufacturers anticipating further recovery through the end of the year, according to a report by the Texas A&M University (TAMU) Real Estate Research Center.

The TAMU report states that disruptions in supply chains led to inflationary pressures last year, according to data provided by a recent Texas Manufactured Housing survey. However, improvements seem to be underway, as the supply-chain disruption index has fallen to its lowest level since the survey started in June 2020.

Additionally, manufacturers have reportedly been streamlining operations to increase the efficiency of their manufacturing operations during the last few months.

"In the case of lumber, which is a major input in manufactured housing, waning consumer purchases at the retail level have reduced demand pressure after surging during the pandemic," Dr. Harold Hunt, a research economist with the Texas Real Estate Research Center at Texas A&M University said. "The price of lumber is currently less than a third of what it was in May."

The TAMU report states that the COVID-19 pandemic affected supply chains across many industries, resulting in price increases.

Additionally, the report notes that ongoing labor shortages are worsening the price increases.

In the U.S., consumer prices have risen by 5.4% since July, the largest increase since August 2008, according to a CNBC report.