Factory-Built Housing: Modular, Manufactured and Panelized

Factory-built housing is any home whose main structure is made in a plant and shipped to the lot, instead of being framed piece by piece on the site. It comes in three main forms: manufactured homes, modular homes and panelized homes. All three start in a factory, but the law treats them differently. A manufactured home is built to one national standard written by the U.S. Department of Housing and Urban Development (HUD). Modular and panelized homes are built to the same state and local building codes as a site-built house.

That difference in codes shapes almost everything else: what a home costs, how a buyer or developer pays for it, and where zoning lets it go. Factory methods can save money and time, but the evidence is stronger for manufactured homes than for modular buildings, and both remain a small part of American homebuilding. A federal law enacted in July 2026 rewrote several of the rules.

The Three Types at a Glance

Manufactured Homes

Federal law defines a manufactured home by size and purpose. It is a structure that travels in one or more sections, is at least 8 feet wide or 40 feet long on the road or at least 320 square feet once set up, and is designed to be lived in, with or without a permanent foundation.

These homes are built to the HUD Code, formally the Manufactured Home Construction and Safety Standards. Congress ordered the standards in 1974, and they apply to homes that entered production on or after June 15, 1976. Older units are properly called mobile homes. Congress replaced that term with “manufactured home” in federal law in 1980.

The HUD Code works as a national building code. Under the statute, no state or locality may keep a construction or safety standard for these homes unless it is identical to the federal one. States keep authority over foundations and installation. HUD updates the code with advice from a consensus committee of 21 voting members, split evenly among producers, consumers and general-interest members.

Modular Homes

A modular home is built in a factory as finished box-like sections that are trucked to the site and joined on a permanent foundation. The 2026 federal law defines a modular home as one built in modules that each meet the state and local building codes of the place where the home will stand. HUD’s regulations let a manufacturer certify that such a home is outside the federal manufactured housing program.

Modules are used for single houses and for apartment buildings, where they are stacked and connected. Because walls are closed up before a module leaves the plant, states often require a state or third-party inspector to visit the factory, according to a 2023 research roadmap prepared for HUD.

Panelized and Precut Homes

In panelized construction, a factory ships wall panels, roof trusses and other components for assembly on site. A precut home arrives as a package of lumber or logs cut to size. Even a house the Census Bureau classifies as site-built may include factory-made trusses and wall panels.

How Much Housing Is Built in Factories?

Not much, by national measures.

• Manufactured homes. Shipments peaked at about 579,900 homes in 1973, according to figures published by the Census Bureau. They reached about 373,100 in 1998, fell to about 49,700 in 2009, and stood at about 102,700 in 2025.
• Modular homes. Of roughly 1,005,000 single-family houses completed in 2025, about 14,000 were modular, or 1%. In 1998 the figure was about 44,000, or 4%.
• Panelized and precut homes. These made up about 16,000 single-family completions in 2025, or 2%.
• Apartment buildings. About 97% of multifamily buildings completed in 2025 were site-built, with roughly 1% modular and 2% panelized.

What the Evidence Says About Cost and Speed

Manufactured Home Prices

The cost case is best documented here. The Census Bureau’s Manufactured Housing Survey put the average sales price of a new manufactured home at about $134,800 in April 2026. Single-section homes averaged about $84,600 and double-section homes about $164,000.

Two cautions apply when comparing those figures with site-built prices:

• Size explains part of the gap. The Congressional Research Service wrote in 2026 that manufactured housing typically costs less “due in part to smaller home sizes and in part to efficiencies that can reduce construction costs.”
• The home is not the whole cost. A buyer also needs land or a rented lot, a prepared site and a loan.

Even so, the per-square-foot advantage is large. A study prepared for HUD and published in 2011 concluded that, after adjusting for land, HUD Code homes cost less than half as much per square foot as standard site-built housing.

Modular and Panelized Buildings

Here the evidence comes mostly from developers and industry estimates.

• A 2017 study by the Terner Center at UC Berkeley reported, based on evidence from developers, that off-site construction could save up to 20% on construction cost for a three- or four-story wood-frame apartment building. It could also cut construction time by 40% to 50%, because factory work and site work happen at the same time.
• A June 2026 JPMorganChase policy paper cited estimated savings of 20% to 30% on construction cost and 30% to 50% on time “for certain projects.”

The same sources describe the limits. The Terner Center noted that only five projects in the San Francisco Bay Area had used off-site methods between 2013 and early 2017, and that factories had struggled to stay in business. The JPMorganChase paper calls the evidence mixed and says savings depend on factors such as market scale and regulation. The 2023 roadmap prepared for HUD found that U.S. industry reports on off-site construction use unclear definitions and no common standard for collecting data. The 2026 law directs HUD to report to Congress on the cost effectiveness of off-site construction by July 11, 2027.

The savings also apply mainly to construction. Land and fees are unchanged, though the Terner Center noted that a shorter schedule reduces interest on the construction loan. Those other costs are part of why housing costs so much to build.

Financing Barriers

Buying a Manufactured Home

Many manufactured homes are titled as personal property, like a vehicle, and financed with chattel loans instead of mortgages. A 2021 Consumer Financial Protection Bureau analysis of mortgage disclosure data found that chattel borrowers pay higher interest rates than borrowers with mortgages. They also face higher denial rates and are less likely to refinance.

Federal policy tries to widen the options:

• FHA Title I. The Federal Housing Administration insures loans to buy manufactured homes and lots. The 2026 law set base limits of $106,405 for a single-section home and $195,322 for a multi-section home, with higher limits when a lot is included. HUD is to adjust the limits each year, and loan terms may run up to 30 years.
• Duty to Serve. Federal law requires Fannie Mae and Freddie Mac, the government-sponsored enterprises, to develop loan products that support a secondary market for manufactured home mortgages for very low-, low- and moderate-income families.

Building With Modules

A standard construction loan is secured by the land and the work on it, and the lender releases money in “draws” as work on the site is inspected. Modules are built somewhere else. The Terner Center reported that factories need money before production starts to order materials, and generally expect a large payment when the order is placed. They also need a steady flow of orders, which is hard to secure while the market is small.

Zoning and Code Barriers

Where Manufactured Homes Can Go

The HUD Code overrides local building codes. It does not override zoning. Local zoning, subdivision rules and design standards still decide where a manufactured home may be placed.

The 2011 HUD study surveyed local governments that receive federal community development grants. Among 612 jurisdictions where manufactured homes had recently been placed:

• Nearly 40% restricted them to special zones such as manufactured home parks or subdivisions.
• About one-fifth required a special or conditional use permit in zones covered by single-family zoning.
• A majority allowed them by right in single-family zones, either under the same rules as other housing or if design standards were met.

The same study reviewed state laws and found that 22 states provided some by-right use, but only eight treated manufactured homes on an equal basis with site-built homes. More states have acted since then. The JPMorganChase paper lists California, Nevada, Ohio, Washington, Virginia, Maine and Maryland as states with laws that prevent localities from barring manufactured homes from single-family lots.

Different Modular Codes in Different Places

Modular homes meet the local building code, so the larger obstacle is variation between places. No national code exists for modular housing. State programs differ, and a factory that sells across state lines may have to redesign its product for each market.

States have begun to respond. In 2025, Colorado enacted a law to create a statewide building code for factory-built structures. Its aim is to reduce friction across more than 300 local code regimes, according to the JPMorganChase paper.

Recent Policy Changes

The 2024 HUD Code Update

HUD published a broad update to the code on September 16, 2024. Among other changes, it allows a single manufactured home to contain up to four dwelling units, separated by fire-rated walls and floors. HUD delayed the effective date from March 17, 2025, to September 15, 2025. The change opens the HUD Code to duplexes, triplexes and fourplexes, the building types known as missing middle housing.

The 21st Century ROAD to Housing Act

Public Law 119-101 was enacted on July 11, 2026. Its Title III deals with factory-built housing.

• Chassis. A manufactured home previously had to be built “on a permanent chassis,” the steel frame it travels on. The law changes the definition to “with or without a permanent chassis.” HUD must issue standards for chassis-free homes, including a distinct label.
• State parity. States must certify to HUD that their laws treat both kinds of manufactured home alike. The deadline is July 11, 2027, or a year later for states whose legislatures meet every two years.
• Energy standards. HUD must adopt minimum energy efficiency standards for manufactured homes by July 11, 2027, and update them at least every three years.
• Modular financing. HUD must review how FHA construction financing treats modular builders, report within a year, and then begin a rulemaking on an alternative draw schedule.
• Title I loans. The law raises loan limits and makes building an accessory dwelling unit an eligible use of Title I property improvement loans.
• PRICE grants. The law formally authorizes the PRICE program, first funded in fiscal year 2023, which makes competitive grants to repair and improve manufactured home communities. Eligible communities include those owned by their residents, such as a resident-owned community, that are affordable to households at or below 120% of area median income.

Supporters of the chassis change argued that the requirement was outdated because most manufactured homes are not moved after installation. The Congressional Research Service notes that removing it may lower costs and allow basements or multiple stories, and that it may blur the line between manufactured and modular homes. Many provisions depend on HUD rulemaking and state action.

What It Means for Affordable and Workforce Housing

• Low-cost ownership. New manufactured homes cost less than most new site-built homes, which makes them a form of starter home for households in the workforce housing income range and below. How affordable they stay depends on the loan and on who owns the land.
• Small, repeated designs. Factories work best when they build the same design many times. That can suit cottage housing and backyard units. See cottage communities and pocket neighborhoods.
• It is a method, not a guarantee. A factory-built home is affordable to a given household only if its price or rent is set, and sometimes legally restricted, at a level that household can pay. Local land-use rules still decide whether it can be built at all, which ties this topic to zoning reform.

The Bottom Line

Manufactured, modular and panelized homes are all made in factories, under different rules. Manufactured homes follow one federal code and have the clearest cost advantage, held back mainly by zoning and costly personal-property loans. Modular and panelized buildings follow local codes and may be faster and cheaper to build, though the evidence is thin and the industry is small. The 2024 code update and the 2026 federal law remove some long-standing limits, and their effect depends on how HUD, the states and lenders carry them out.