Manufactured housing rent growth remains elevated

Manufactured housing overview

The national occupancy rate for manufactured housing properties dipped 10 basis points from the first quarter to the second quarter. While the change was modest, this was the first quarterly decline in the national rate in more than three years. Several regions in the country posted stable occupancy rates or even slight improvements, but there were a few pockets of softening that impacted the national rate. Occupancies in the South region ended the second quarter 40 basis points lower than recent averages, despite some improvements in high-growth states such as Georgia and South Carolina. The regional rate was driven lower by weaker performance in Florida, where occupancies have dropped by nearly 100 basis points from levels recorded a few years ago. A similar trend is emerging in the Southwest, where improving performance in Arizona and Oklahoma was more than offset by a drop in Texas, which features the region’s largest inventory of manufactured housing units.

After beginning the year on an upswing, manufactured housing transaction counts slowed during the second quarter. While the number of transactions declined, dollar volumes remained elevated and per-space pricing reached a new high. The median sale price reached $62,000 per space year to date, surpassing the previous peak set in 2022. Buyers are competing for targeted assets rather than broadly stepping up activity. This selectivity shows up in cap rates, which have posted a national average of approximately 6.5% year to date. A handful of deals in states where housing and land prices are elevated such as California and Colorado closed with cap rates below 5%. Transactions in smaller or more remote markets closed with cap rates approaching or topping 10%. California remained the most active state in the country by dollar volume, continuing a run of market leadership that stretches back for several years.

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