HousingWireHousingWire
The U.S. Department of Agriculture (USDA)’s Rural Housing Service (RHS) has implemented a final rule that allows for the financing of manufactured homes through the RHS Single Family Housing (SFH) Direct Loan Program and the SFH Guaranteed Loan Program.
The rule makes existing manufactured homes meeting specific criteria eligible for financing under the programs, according to an announcement issued by the RHS this week. The new rule also “reduces regulatory burdens related to manufactured housing requirements and provides flexibilities for energy efficient manufactured and modular homes located in land lease communities operating on a non-profit basis,” RHS added.
The rule went into effect on Monday, May 5. It was initially proposed as a draft final rule in the Federal Register in 2023, and is seen as a potentially difference-making tool in the rush to create more housing supply across the country.
“Well built, affordable housing is essential to the vitality of communities in rural America,” the background information in the Federal Register reads. “[Rural development] single family housing programs give families and individuals the opportunity to buy, build, or repair affordable homes located in rural America. Eligibility for these loans, loan guarantees, and grants is based on income and varies according to the average median income for each area.”
After the initial publication of a draft final rule in August 2023, RHS received stakeholder comments from 27 separate individuals or organizations replying favorably to the proposal. Some had indicated that manufactured housing provides affordable options for prospective homebuyers, and can play a role in adding to the nation’s housing supply — likely a key factor influencing the elevated costs for housing observed throughout the country today.
Manufactured housing has also seen improvements in quality and durability over the years, the comments said, increasing homeownership chances for low-income families.
In its comment responses, the RHS also noted a suggestion to roll these standards out to all states, saying that the final rule as implemented does so for all “eligible existing manufactured housing.” But the specific application to a manufactured home must consider the year in which a manufactured home was built, since it “takes into account the Manufactured Housing Improvement Act of 2000 which set forth federal guidelines that all factory-built housing must meet.”
Manufactured housing has picked up steam in recent years as a more visible tool in the ongoing work to bolster U.S. housing supply. In December, one of the final moves of the U.S. Department of Housing and Urban Development (HUD) under the Biden-Harris administration was to award $225 million to preserve and renovate manufactured homes across 26 states.
Interestingly, data from HUD and the U.S. Census Bureau analyzed by LendingTree that month also found that manufactured homes are appreciating faster than site-built homes, which found that the average price of a new manufactured home sold in the U.S. increased by 58.34% between 2018 and 2023. During that same period, site-built homes appreciated at 37.66% over the same period.
Last summer, HUD also launched a manufactured home community loan program, aiming to offer an alternative to private investors for the purchase, refinance and rehabilitation of manufactured homes. But while members of the manufactured housing industry at the time were encouraged by more attention from federal housing leaders, one expressed concern over their characterizations of key private sector partners in the industry.
