Are Investors Overlooking This Growing Housing Segment?

Everyone agrees that there's a housing shortage in the U.S, though estimates of the gap vary widely.

Realtor.com put the housing gap at over four million homes, while JPMorgan Chase says it's probably closer to 1.2 million homes.

Either way, well over a million new homes are needed to match demand.

Home prices are also at an all-time high. The National Association of Realtors puts the median price at $440,600. That's about five times the median household income.

Housing experts believe many steps are needed to make housing more available and affordable, including raising incomes, helping buyers finance home purchases, and removing red tape and overregulation to make it easier to build new homes.

But there's one more solution that is quickly gaining traction, and it's one investors should be aware of -- manufactured housing.

With an ongoing housing shortage across the U.S., many experts see factory-built homes as a major part of the solution, especially when the average manufactured home goes for about $120,000, a price that makes these homes much more affordable for middle- and low-income consumers who would otherwise struggle to afford a site-built home.

Image source: Getty Images.

New legislation will boost manufactured housing

Congress recently passed bipartisan housing legislation, the ROAD to Housing Act, which streamlines regulations to make it easier to build new homes and increase housing supply.

Part of the act addresses manufactured housing directly, eliminating long-standing barriers that have driven up the cost of these homes, allowing the creation of multi-story homes, and changing zoning laws to integrate them into existing single-family neighborhoods.

I believe the legislation will benefit two specific types of companies: those that make manufactured and modular homes, including Legacy Housing (NASDAQ: LEGH) and Champion Homes (NYSE: SKY), and manufactured housing real estate investment trusts (REITs) such as Sun Communities (NYSE: SUI) and Equity LifeStyle Properties (NYSE: ELS).

Legacy Housing builds, sells, and finances both manufactured homes and tiny houses in the U.S. Meanwhile, Champion Homes builds manufactured and modular homes as well as modular buildings for multi-family, hospitality, and senior housing.

Sun Communities has a portfolio of 513 manufactured home communities in the U.S., Canada, and the United Kingdom. And Equity LifeStyle Properties' portfolio consists of 453 properties in the U.S and Canada.

Globally, the manufactured housing market was valued at around $36 billion in 2025 and is growing by 4% a year, expected to reach about $50 billion by 2034.

Given the persistent housing crisis in the U.S., with both undersupply and low affordability, and recognizing that manufactured housing can be a major part of the solution, these housing companies are definitely worth a look.

JPMorgan Chase is an advertising partner of Motley Fool Money. Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Sun Communities. The Motley Fool has a disclosure policy.