Factory Built Home Sales Increase as New Home Sales Continue To Fall

Sales of new homes droped for the third month straight in July, a sign that housing remains a drag on the economy. If the current pace continues, 2011 will be the worst year for new home sales on record dating as far back as at least half a century . But the trend is not slowing for factory built manufactured homes – which show surprising inroads into the traditional home market amidts the economic downturn.

Sales of new houses fell nearly 1 percent in July to a rate of 298K , the Commerce Department said Tuesday . That’s less than half the 700K that economists say represent a healthy market. But new sales of manufactured homes continued to rise – a astonishing trend in the housing market for many traditionalists. It’s apparent that buyers are waking up to the advantages of modern technologies applied to factory built homes .

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Last year, 323,000 new homes were sold — the worst year on records that go back to 1963. New sales of factory built houses , however, rose last year for the third year straight — a swing that has many industry insiders taking note .

While new housing represent less than a fifth of the housing market, they have a much larger impact on the economy. Each home built produces an average of three jobs and $90,000 in tax revenues , according to the National Association of Home Builders. Manufactured homes create the same number of jobs , and the same amount of tax revenues , only at a strikingly smaller cost to the home buyer. In this economy , that is clearly the point driving sales in the factory built home market.

All housing sales remain weak. The sales pace for previously occupied houses is trailing last year’s 4.91 million sales, the fewest since 1997. In a healthy economy, consumers invest in roughly 6 million existing homes every year . A report last week showed that more property sales than usual fell through at the last minute , a sign that many buyers may be nervous about the economy. At least 16% of deals were canceled ahead of closings last month — four times the rate in May. New surveys are reporting that many buyers whose escrows fall through have adjusted their focus towards the manufactured home sector, citing the bottom-line purchase price as the main cause.

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Sales of new houses have dropped 18 percent in the two years since the Great Recession officially ended.

A telling sign of how poor things have become for the housing industry : prices have dropped more since the recession started, on a percentage basis, than during the Great Depression of the 1930s . And it took 19 years for prices to fully recover after the Depression.

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The housing indurstry is now becoming concerned that with the buyer’s shift towards factory built homes, that recovery in new home sales may be slower even than in the 1930’s, even in this faster- paced modern world of today .

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