Demand for manufactured and modular housing, while still significantly below pre-recession levels, stabilized in 2010, as several leading suppliers continued to adjust their products for cost- and energy-conscious buyers.
HUD-code, factory-built home shipments held steady last year at 50,000 units, versus 49,800 in 2009, the first time that number has risen since 2006, according to Census Bureau estimates. Modular home shipments also showed a slight gain, to 12,900 in 2010 from 12,700 in 2009, according to Hallahan Associates, the Baltimore-based research and consulting firm that provided Builder with the breakdown of shipments for the industry’s 10 largest modular suppliers in 2010.
Modular consumption is down 70 percent from its peak in 2005, “a rate comparable to the decrease in overall site-built housing during the past five years,” observes Fred Hallahan, president of Hallahan Associates. Consequently, modular’s market share—2 percent of total residential production nationally, 7 percent in the Northeast—has been relatively constant.
The housing recession continued to stir the pot in this sector last year. “Modular production is increasingly concentrated among a small number of multi-plant companies,” says Hallahan.
Smaller, Maryland-based Haven Custom Homes, whose modular designs are among the most stylish in the industry, is one company that’s looking forward to better days ahead. In January 2011, it acquired Penn Lyon’s dormant production facility in Selinsgrove, Pa., which the company claims will allow it to expand its product offerings.
Palm Harbor Homes’ Chapter 11 bankruptcy filing in late November served as a prelude to that company’s assets being acquired, for $83.9 million on March 1, 2011, by Cavco Industries’ Fleetwood Homes. In May 2010, Excel Homes’ ownership transferred from one private equity firm to another. As part of its acquisition of Excel, H.I.G. Capital reopened the company’s Avis, Pa., plant, and installed a new CEO, former management consultant Steve Scheinkman.
Excel was among the modular manufacturers that rolled out smaller house plans last year to attract buyers looking for economy. Excel’s “Starting Lineup” series, for example, offered homes under 1,000 square feet, with prices starting as low as $60,000. New York–based Westchester Homes, whose portfolio has included 4,000-square-foot plans, in October introduced a new series that ranges in size from 740 to 1,440 square feet.
More modular suppliers are emphasizing the energy-saving qualities of their products. At the International Builders’ Show in February 2010, Champion Enterprises unveiled what it touted as the first nationally produced modular home to meet the NAHB’s green building standards. Champion said at the time that its GO Houses could achieve, at a minimum, the NAHB’s bronze level of green certification. Its series offers ranch, Cape Cod, and two-story designs that range from 1,400 to 2,500 square feet, and Champion was hoping to have at least 50 of them built in the first year.
Hallahan remains optimistic about modular’s future and thinks its growth rate in the next few years “could mirror … decreases in the past five years,” and get up to 30,000 units per year in the near term.