FREEDONIA RESEARCH REPORT ANALYZES US SHIPMENTS OF PREFABRICATED HOUSING

US shipments of prefabricated housing are forecast to grow 0.6 percent annually to 190,000 units in 2011, despite projected declines in US single-family housing starts.  Modest increases in market penetration for both manufactured housing and other prefabricated housing will support growth in the face of a weaker overall environment for new housing. These and other trends, including market share and company profiles, are presented in Prefabricated Housing, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

Since 1998 manufactured housing shipments have declined nearly every year, and in 2006 were only one-third of their cyclical peak.  In the late 1990s, manufactured housing lenders increased approvals to “subprime” borrowers for low- and no-down payment loans.  When interest rates rose around the turn of the millennium, a high number of repossessions flooded the market, depressing demand for new units.  Following the 2001 recession, expansionary policy by the Federal Reserve reduced conventional mortgage interest rates, making site-built housing or existing housing more attractive to low-income buyers, further restraining demand for manufactured housing. 

By contrast, shipments of other prefabricated housing types (i.e., modular, precut and panelized) experienced marginal growth throughout much of the 1996-2006 period, before contracting in 2005 and 2006.  Both segments are expected to see growth in unit shipments through 2011, albeit less than one percent per year. Gains will be fueled by positive unit growth following a long period of depressed demand.  Price increases will account for the majority of this growth, as a shifting product mix and increased raw material costs raise the average price of units produced.  Driving growth in manufactured housing will be multisection units, particularly those with three or more sections. 

Shipments of precut homes are forecast to perform the best of all other types of prefabricated housing, growing nearly four percent annually through 2011.  Demand will benefit from an aging baby boomer population seeking secondary housing.  Growth will be the fastest in the Midwest housing market, but precut housing will also see gains in the contracting market of the South.  Panelized and modular housing will also experience growth through 2011, but will be restrained by weaker demand in the declining housing market of the Northeast.

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.