Can Factory-Built Homes Fix the Housing Crisis? Lawmakers Think So—Builders Are Split

For years, factory-built homes have been treated as housing's last resort: the “trailers” you drove past on the edge of town, not the place you aspired to build wealth.

That stigma is now colliding with a new reality. As home prices and construction costs keep climbing, everyone from federal lawmakers to celebrity designers and community-based nonprofits are suddenly looking to off-site construction—homes built in factories and assembled on-site—as a way to add more housing, faster and at a lower price point.

In Washington, DC, that shift is crystallizing in the Renewing Opportunity in the American Dream (ROAD) to Housing Act of 2025, a bipartisan bill that would nudge federal rules to better reflect what’s already happening on the ground. 

The bill directs HUD to update the legal definition of “manufactured housing” and to study how modular and other off-site homes are financed and regulated, with the goal of making it easier to build more of them.

Supporters say it’s one of the fastest ways to add lower-cost homes at scale, but some builders are sounding a more cautious note. They see both a once-in-a-generation chance to normalize factory-built housing, and a real risk that blurred definitions and old stigma could backfire on buyers.

Off-site homes are having a moment—for good reason

When Martha Stewart is in on a housing idea, it’s officially gone mainstream. The home icon recently announced a new prefabricated home collection with prices starting around $150,000—a glossy example of a shift that’s been building for years.

Research from Harvard’s Joint Center for Housing Studies looked at six community-based organizations that used off-site construction—panelized, modular, and manufactured—to build everything from single-room-occupancy units for formerly unhoused residents to for-sale homes on community land trust lots. Across most of those projects, factory building cut timelines, lowered total development costs, or both compared with conventional construction.

Sean Roberts, CEO of California-based Villa, which builds modular homes and ADUs, says the appeal of factory-built homes is straightforward.

“Modular construction is particularly useful for projects where speed and predictable outcomes are priorities, and in many cases it can offer cost savings compared to building on-site,” he said, adding that at Villa, “our focus is on using off-site construction methods to add new housing supply at a lower marginal cost.”

Inside the factories, the build process can be almost shockingly fast.

“The build happens in a controlled environment that is organized for production efficiency and quality control, with rigorous inspections throughout the build,” Roberts explains. “It takes around two weeks for the home to go from a variety of raw materials to a nearly completed home structure.”

That kind of speed is exactly what lawmakers are hoping to tap. But it’s also where the hard part begins—because not all factory-built homes are built to the same standards.

Manufactured vs. modular: why the code alphabet soup really matters

To most buyers, a house that shows up on a truck reads the same—whether it’s a modular ranch or what is colloquially referred to as a “double-wide.” To people inside the industry, though, the difference is baked into the building code.

“So the clear difference is the manufactured house, or also known as a mobile home, prior to 1976. But in 1976, the Department of Housing and Urban Development created a manufactured housing and Safety Standards Act that defined a thing called a manufactured home,” explains Ken Semler, president and CEO of Impresa Modular. “And so it was a way to protect the consumer and create an affordable housing product that could serve America.”

Those manufactured homes are what many people still call “trailers.” They’re built to a federal HUD code, not local building codes, and historically they’ve had a permanently attached steel chassis that stays with the home—even when it’s placed on a permanent foundation.

“It's basically got a frame with axles under it, and you haul it into place,” explains Semler.

Modular homes, by contrast, are built to the same International Residential Code (IRC) or local building code as conventional site-built houses. The modules are fabricated in a factory, then trucked to the site and craned into place—but once assembled, they’re legally just a regular house.

“Modular home is a misnomer. There is no such thing as a modular home. It is a home built using modular construction,” Semler says. “We build to what's called the International Residential Code, the same thing, the same code that every other house is built to.”

Inside the plants: how the products really differ

But those on the manufactured side bristle at the idea that they’re cutting corners.

“In the manufacturing home industry, the fact that we can provide a high-quality home at a quicker rate, at a quicker pace, really changes the game, because our homes are built to roughly the same standards,” says Robert Glaser, senior manager at Clayton Homes, a producer of manufactured homes. “They're a HUD code home, so they're already approved by the federal government.”

“Clayton is using the highest quality materials that we can. We use brand-name appliances, brand-name plumbing fixtures, brand-name shingles,” he adds. “You name it. It's top of the line, that we're using. We don't cut corners.”

Because everything happens indoors, he argues, that quality is actually easier to maintain than on a conventional job site where framing might sit in the sun and rain for weeks.

“We're in a controlled environment. We're not worried about whether we continue to work rain, sleet, snow,” he says. “We're kind of like the post office in that we just, we keep going. Because it's in a controlled environment, and we have what's called production efficiencies in place, we're able to put out a house a lot faster and at a lower cost because it's using less man hours.”

And that offers huge savings to consumers. The average cost of a manufactured home is just $124,300, according to the Manufactured Housing Institute—compared to the median price of just over $450,000 on a new site-built home.

Cross-mod homes: the hybrid model where manufactured meets site-built

If the distinction between manufactured and modular seems complicated already, Washington, DC's new push—and a relatively new product type—are about to make it even more nuanced.

The manufactured housing industry has spent the past few years promoting “cross mod” homes that blend a factory-built home with site-built elements like porches and garages. When they meet specific design criteria and are placed on permanent foundations, these homes can qualify for Fannie Mae and Freddie Mac programs like MH Advantage and CHOICEHome, and allow appraisers to use nearby site-built homes as comps and unlock 30-year mortgage financing that looks a lot like a conventional loan.

“They blur the line between a site-built home and a manufactured home,” says Glaser. “What that means is that 70% of the home is being built here in the factory, 30% is being built on site, and that 30% consists of a site-built porch and either attached or detached garage, depending on the model house.”

Because of those extra site-built features and the way the programs are structured, he says, “those purchasers are getting instant equity versus, you know, doing it as a regular standalone manufacturer.”

Semler sees it very differently. Instead, he characterizes these homes as nothing more than marketing.

“I call it diabolical marketing genius,” he says. “In the sense that it intentionally, in my mind, confuses the consumer.”

He worries that these homes don’t offer consumers the same quality or appreciation potential; and without clear delineation between them, house hunters could end up buying into a bad deal.

Do these homes actually build wealth?

Behind the technical debates about codes and quality is a simpler, emotional question: If I buy one of these homes, will it actually appreciate—or am I buying an asset that loses value like a car?

New data from the Federal Housing Finance Agency, analyzed by the Urban Institute, suggest that for many buyers, the old fears are flat-out wrong.

Looking at 2000 through mid-2024, Urban’s researchers compared price appreciation for site-built homes and manufactured homes financed with GSE-backed mortgages—meaning the owner holds title to both the home and the land. Over that 24-year period, site-built homes increased 212.6%, while manufactured homes rose 211.8%—both working out to roughly 5% a year.

Since 2014, manufactured homes in that dataset have often outpaced their site-built counterparts: Except for just two quarters, manufactured homes had higher year-over-year price gains than site-built homes in every quarter from Q2 2014 through Q2 2024.

But there are important caveats. The data cover only homes where the buyer owns the land, not units on rented pads, and manufactured housing is heavily concentrated in a handful of high-appreciation states like Texas and Florida. In recent years, land values have done a lot of the heavy lifting: One Urban analysis found that land’s share of home value climbed from about 36% in 2012 to more than 57% in 2023, with land prices rising far faster than the cost of structures.

Still, the takeaway is powerful: Factory-built homes can absolutely be a wealth-building asset when they’re titled as real property and permanently attached to land.

From “affordable” to “attainable” housing

For all the fighting over definitions and code sections, everyone I spoke with ultimately comes back to the same goal: getting more people into homes they can hang on to and pass down.

Glaser doesn’t even like the word “affordable.”

“I don't use affordability anymore, because what's affordable to me may not be affordable to someone else,” he says. “I look at it as more of attainable housing.”

He also thinks a lot of the resistance to manufactured homes is stuck in the past.

“Manufactured homes get a very bad rap. … There's a stigma already there,” he says.

But today, he adds, modern models are being used for everything from fire rebuilds in California to small infill projects for nonprofits serving domestic violence survivors and low-income families.

“Those are things that have really kind of piqued [developer] interest,” Glaser says, “because they can purchase a plot of land, do the improvements, and put a very nice house at a very low cost.”

On the modular side, Semler says the federal push is a chance to grow—but only if buyers can clearly see what they’re getting.

“We're trying to brighten that line, because we typically do cost a little bit more because we're building to a higher code,” he says. “We all want people to get affordable housing. We're just bumping heads on how we actually get there and be honest about what we're providing.”