U.S. Manufactured Housing Investment Activity Surges During the First Half

The manufactured housing sector performed well during the second quarter, with occupancy holding at peak levels and asking rents continuing to rise. Demand for manufactured housing remains strong alongside elevated new supply shipments. Nearly 54,000 units were shipped across the country during the first six months of the year, marking the second highest first-half total of the past decade, surpassed only by levels recorded in 2022. Despite continued supply growth, occupancy conditions have remained stable since approaching 95.0% in early 2024. The current rate of 94.9% is up 10 basis points annually. This tight occupancy has allowed operators to raise rents in recent periods. Asking rents trended higher by 7.0% during the past year to $752 per month. Rent growth has been steepest in the Southwest and West regions. Year over year, manufactured housing rents in the Southwest advanced by 7.9% while rents in the West rose 7.5%.

Momentum in the manufactured housing investment market has been building since the second half of last year, with activity trending closer to traditional levels. Total sales during the past year outpaced the subdued levels recorded in the preceding 12 months by 51%. Additionally, sales velocity during the first half exceeded levels recorded in the same period of 2024 by 66%. Year to date, cap rates are averaging 5.9%, down from an average of 6.3% in the closing three months of 2024. While sales activity remains concentrated in the historically key markets of California, Florida, and Texas, velocity has picked up in Michigan. Michigan has accounted for 7% of all sales to this point in the year, putting the state in the top five for activity. Prior to the downturn in recent years, Michigan consistently ranked in the top five states for total sales from 2016 to 2021.

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