Are Prefab Homes Ready for the Mass Market? 7

Wednesday, February 26th, 2014
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Prefab homes have shown promise for more than a century, but have never grabbed more than a small fraction of the new-home market. That may be changing now.

Several different types of homes could be considered prefab, including panelized and modular homes, where parts of the home are factory built and assembled on site. Manufactured homes are largely completed at the factory but require some on-site construction, such as a foundation and utility connection. Mobile homes are considered separately.

In the US, sales of the simple, rectangular, and low-cost factory-built homes known as manufactured homes have plummeted from about 374,000 units yearly in 1998 to about 50,000 in 2013. In contrast, in Canada, Kathleen Maynard, the Canadian Manufactured Housing Institute’s chief executive, said factory-built homes hit 11 per cent of newly built homes in 2012, up from three to four per cent in 2000.

Prefab homes offer a range of prices. For manufactured homes, the price advantage over a site-built home is huge. According to a Fannie Mae report, “In 2012, the average price per square foot of a new manufactured home was $41.97, less than half the $86.30 per square foot cost of a new site-built single-family structure, excluding land.”

Semi-custom homes cost 20 to 40 per cent less per square foot than a standard stick-built home, according to the company.

More expensive, custom prefab homes appear to be gaining in popularity compared to site-built homes, though they often don’t cost any less than site-built homes.

Advantages of prefab building

Prefab homes offer certain advantages over totally site-built homes. Builders often cite low exposure to weather during construction. Unlike site-built homes, prefab homes will be exposed to rain and snow for little or no time before the exterior is finished and weatherproof. Production workers also can avoid heat, cold, rain, snow, and wind, making factory-built homes more uniform and safer to work on.

Waste is also reduced, with prefab builders claiming that the factory environment enables them to manage material use more closely, resulting in less waste. A typical stick-built home generates 30 to 40 per cent waste during construction. Thanks to modular factory production, builders can reduce construction waste to only about two per cent, on average.

Timing is another factor. Low-cost factory-built homes are often sold like cars, with a selection available on a dealer’s lot, meaning a buyer can have a new home on site in a matter of days. Buyers of more upscale homes will usually choose from a builder’s design catalog, resulting in a streamlined production process. It is commonplace for these homes to be built in under six months; while the home is being built in the factory, the foundation and other site work are also taking place, saving time.

Fully custom homes take many months or even years to build, whether prefab or site built.

Energy efficiency is largely dependent on the standards of the builder. Unity Homes, a New Hampshire builder, offers four factory-built, panelized designs they say are capable of achieving Passive House and net-zero status. Rigorous air sealing, triple-pane windows, and robust insulation in a prefab home are not much different from site-built homes.

Design options

With techniques like panelization and use of modules, prefab home designs have moved beyond the simple rectangle that characterized manufactured homes for decades. Builders and architects can now create any size and shape of home from prefab panels and modules that they assemble on-site.

At the low end of the price scale, manufactured homes are still simple rectangular shapes that simplify construction and lower costs. These homes typically cost about half of a similar site-built home.

In the mid-range, prefabricated houses offers a 958 square foot, two-bedroom home priced at $139,000, or $145 per square foot. At the high end of the prefab home market, custom designs that incorporate prefab components appeal to many buyers, though there’s no price advantage. Prices of more than $200 per square foot are common.


History of prefab homes

The concept of a factory-built home that combines the benefits of consistent construction with economies of scale has had potential for decades but has never truly succeeded in capturing a substantial part of the market.

Inventor R. Buckminster Fuller started his Dymaxion project in the 1920s, and the U.S. Army built a few in the Persian Gulf during World War II, but it was a commercial failure. The Dymaxion Deployment Unit looked like a round steel grain bin, but was cheap and could be constructed quickly for use by G.I.s.

Prefab house from army

 The Lustron home showed potential in the late 1940s in the US, selling approximately 3000 units, but the company failed in just a few years. The homes themselves used steel studs, with enameled steel for the siding and roof, but were otherwise conventional in design. Lustron homes were about 25 per cent cheaper than a similar conventional home.

Going back a further 100 years or so, carpenter John Manning designed the Manning Portable Colonial Cottage for Emigrants circa 1837 for export to Great Britain’s colonies. Manning’s own son was headed for Australia, so Manning designed and prefabricated a simple wood-framed structure that could be shipped and built easily in any of Britain’s colonies by unskilled laborers.

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  1. John Doyle

    I doubt pre-fab has much of a future. Except as temp accommodation for refugees and there are going to be HUGE movements of refugees in the future.
    For those who are not paying attention [most of us] our model of civilization is on the way out and if we don't start paying attention real soon now it's going to get ugly.
    We are ignoring the mathematical certainty that our linear economy will fail. We don't have a date and we can't guess which trigger will kick start it although it has already begun. In 1971 our consumption crossed over into overshoot and now we are at a planet and a half. We all know about peak oil but there are many peaks in front of us; peak oil, peak soil, peak metals, peak phosphorus, peak money.
    We are all on borrowed time.

  2. Gary Rawlings

    The pre-fab house is one of the main ways to reduce housing shortage around the world especially in Africa and Asia if they can also have the solutions for the supply of water, sanitation, and power to these types of dwellings that entered the UK market at the end of the second world war and are still there today in a number of areas.

  3. Richard Sheridan

    Pre fabricated or modular housing will be one of the growth darlings of the 21st century. Sure there will always be a place for in-situ built concepts however modular manufacture and assembly can be done 24/7 all year. Compliance and energy provisions have made modular off site built concepts deliver much higher standards in recent years. QA /QA Quality, ITP's and general Risk Management of construction of modulars have taken them to a new dimension. Globally there are some very impressive fresh and innovative concepts developed and that will continue.

  4. Ella Wood

    I am a firm believer in great architecture being site specific, however the article certainly sells pre-fab as reducing waste and eliminating a lot of the problems that arise during construction phase (weather, time and cost blow outs). Perhaps there is a middle road somewhere, where architects help to facilitate the location, orientation and integration of a prefab home to a particular site?

  5. Puya Hadizadeh

    Fewer people might hire architects and hence unemployment in the architecture industry will get rampant.


    I have been expecting for its explosive development for 4 years , and my colleges for more than 10 years. I believe this is a promising products. Evrionmental friendly, time-saving , safe from the earthquake. I will keep waiting.

  7. Eric Taramasco

    Thank you for the Article Mr. Hansen. I like to think I have an optimistic on the Human race and the potential benefits with Manufactured Housing. With the prices of homes in Hawaii. I believe that Hawaii could benefit greatly from manufactured housing. However it is a bit of political football. I am just starting a blog portion with my website and plan to link this article. I promise to properly source your fine article. Aloha