They code they use is from when I first started modding and therefore used a jury-rigged method of spawning. Their spawn rate, like Houses, is based entirely on Hero's trained. Where originally, a House would spawn every 4 Heroes trained, the new code goes like this:
House: 4 Heroes
House: 8 Heroes
Manor: 12 Heroes
House: 16 Heroes
House: 20 Heroes
Manor: 24 Heroes
Estate: 30 Heroes
And then loops back around.

I experienced a similar problem. I believe that if you build gnome hovels, you will not be able to spawn manors or estates. This has been my experience.

I can confirm this, DaBahamaLlama, it does seem to be related to Gnomes.