Trump Administration Moves To Make Prefab Homes Easier To Build in Factories

The U.S. Department of Housing and Urban Development is aiming to update definitions for manufactured housing, in a bid to make prefab homes easier to build.

HUD released a proposed rule on Friday morning that would revise certain definitions of manufactured housing. The reinterpretation of the rules could remove the requirement that all sections of manufactured houses be built on a permanent chassis. The multipart housing bill Congress is on the brink of passing, the 21st Century Road to Housing Act, also includes a similar change.

Proposed rules are open to public comment for 60 days before the agency refines them. HUD will accept input through Aug. 11.

Easing the chassis requirement, HUD hopes, will make it easier to build multistory manufactured homes, which builders can then deliver in parts to the final destination.

“America needs more housing, and manufactured housing is part of the solution,” HUD Secretary Scott Turner said in a statement. “We are removing unnecessary barriers, encouraging innovation, and helping American manufacturers deliver more affordable housing options for American families.”

HUD and other housing advocates have pointed to manufactured housing as a possible answer, amid a well-established nationwide housing shortage. Not all builders are on board.

Doing away with the chassis requirement

The chassis rule was outlined in the 1974 National Manufactured Housing Construction and Safety Standards Act, at a time when mobile home owners moved them frequently.

Previously, HUD interpreted that to mean each section of the home must sit on a permanent chassis. But that precludes multistory building. Instead, HUD aims to interpret the current rule in a way that only the final, completed home sits on a chassis.

"Upon further consideration of the statutory text, structure, and context, the Department concludes that the permanent chassis requirement applies to the manufactured home as a whole—that is, to the completed 'structure'—rather than to individual transportable sections or components of that structure," it said in the rulemaking.

The congressional bill goes further. It eliminates the chassis requirement on all homes. It also aims to cut some energy efficiency mandates on manufactured housing construction.

There is a bipartisan appetite to change the rules. Sens. Ruben Gallego (D-Arizona) and Thom Tillis (R-North Carolina) pitched a bill to remove the chassis requirement for all manufactured homes. Then, the Senate assembled it with other provisions into the new bipartisan housing bill this year.

Industry reception

Between HUD's rules and the housing bill, the removal of the chassis requirement would signal a major change for the industry. Housing advocates hope removing the rule makes it cheaper to build manufactured homes. And they also say it reflects modern realities around them.

HUD estimates that about 20 million people live in manufactured homes. The National Association of Home Builders' research shows regional variation in where they're located. They make up a relatively small share of the housing stock in the Midwest and New England. But they are far more concentrated in the South and Mountain states, where they can make up close to 10% of housing in some local markets.

NAHB found shipments of manufactured homes hit their highs in the '90s, when they could top 350,000 new homes a year. That number halved after the turn of the century.

The Lincoln Institute for Land Policy estimates that just 5% to 7% of manufactured homes ever move from their first destination.

Cutting the chassis requirement could save $5,000 to $10,000—9% of the cost of a manufactured home. Manufacturers would still use the chassis to deliver the home, but then they could remove and reuse it.

The National Low Income Housing Coalition supported the measure, saying it "would further reduce cost and expand design and location possibilities for manufactured housing."

That doesn't mean the idea is broadly accepted, though. The Virginia-based Modular Homebuilders Association opposed removing the chassis requirement in feedback last year. It said doing so "would blur the line between federally regulated manufactured housing and state-inspected modular homes, undermine consumer confidence, and create an unfair regulatory advantage for HUD-code producers."

Housing solution

Realtor.com® senior economist Joel Berner notes that local zoning rules dictate more limitations on the industry than HUD. The chassis requirement and other changes might save some costs, but states and cities also need to codify fewer restrictions.

"Many localities have discriminated against manufactured housing and don't allow it to be placed in some or any parts of the jurisdiction, often for 'aesthetic' purposes even though modern modular homes are indistinguishable from stick-built homes and often hold up better to extreme weather."

Some regions are responding with their own rules. Virginia recently legalized manufactured homes in single-family-zoned areas that once precluded it. Manufactured housing flourishes in other states, like Arizona, where it's popular in senior communities.

Universities and others, meanwhile, are researching tougher and more resilient building standards.