Shipments of modular homes totaled 7,400 in the first quarter of 2007, a 20.4 percent decrease from the first quarter of 2006, reflecting the overall decline in housing demand. Among the 29 states tracked by Hallahan Associates for the National Modular Housing Council, shipments were up in three states, down in 22 states and flat in four states compared with the same period a year ago.

Year over year comparisons indicate first quarter shipments increased in Delaware, Tennessee and West Virginia, and remained flat in Rhode Island, Missouri, Georgia, and Vermont. First quarter shipments were down in Wisconsin, Florida, Connecticut, Massachusetts, Michigan, New Jersey, New York, Ohio, Illinois, South Carolina, Iowa, Minnesota, Texas, Pennsylvania, Colorado, New Hampshire, North Carolina, Nebraska, Virginia, Maine, Indiana and Maryland.

The 20 percent decline in modular shipments—while startling—pales in comparison to the deterioration in site-built housing. First quarter housing starts were down over 30 percent, year over year. In fact, the market share of modular housing actually grew in 20 of the top 29 modular states.

Current housing market conditions have created a challenging environment for modular housing. Specifically, there remains a sizable “glut” of available site-built housing, due to overzealous building and weaker sales of new and existing homes. So, while most modular builders are fortunate to not to have the problem of a large inventory of unsold homes, the presence of a roughly seven month supply of site-built homes will continue to whittle away at modular demand until this glut is absorbed.

The latest new site-built home sale statistics from the Census Bureau indicate that progress toward this end is already occurring: sales prices are falling and the pace of home sales is accelerating. This is good news for modular housing. The sooner this glut of homes is “worked off”, the sooner demand for modular housing will pick up.

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