How Factory-Built Housing Can Reshape America’s Housing Market

The housing industry’s decade-plus-long inventory challenge could see its first true sign of resolution should the 21st Century Road to Housing Act become law. 

Among its many affordability-driven mandates is a provision to reclassify how mobile and manufactured homes are built by eliminating a more than 50-year-old construction standard. 

A legal mandate passed in 1974 as part of the National Manufactured Housing Construction and Safety Standards Act requires manufacturers to attach a factory-built home to a metal chassis, specifically a 10’’ to 12’’ frame, to make them towable. However, according to the Lincoln Institute of Land Policy, less than 5 - 7% of manufactured homes are moved once in place, many being affixed to traditional foundations. 

The chassis adds anywhere from $3,500 to $18,000 to the cost of a manufactured or mobile home, depending on the size and floor plan design. Removing it opens the door to more than reduced cost, including entirely new floor plan ideas and material usage, among other benefits to builders, landowners, and consumers.

The Case for Prefab

In addition to building cost, there are financing differences that prevent owners of some manufactured homes from having the tax and financial benefits that, in part, make home ownership so attractive.

According to the 2025 Eye on Housing, an extensive report by the National Association of Home Builders, “the majority of new manufactured homes are titled as personal property, which is not eligible for conventional mortgage financing because the [Fannie Mae and Freddie Mac] do not acquire chattel loans. Nonetheless, it is common for manufactured homes to be placed on private land even though the unit is under a personal property title—a title that applies to movable assets, such as vehicles, tools or equipment, and furniture, whereas a real estate property title includes land and any structures permanently attached to it.”

Widely varying state and federal mandates on required lot size, material quality, and construction type have long anchored pre-fab housing to their legacy stigmas and added costs, contributing in part to a current housing shortage of about 4 million homes, according to Realtor.com.

A 2023 study by the Joint Center for Housing Studies at Harvard University found that “all three types of manufactured homes [single-section, double-section, and CrossMod®] continue to offer significant cost advantages over site-built housing.”

“Assessments of the state of the market have identified several factors that have contributed to these low production levels, including limits on access to affordable financing, zoning restrictions on the siting of these homes, and consumer concerns about appreciation and the quality of these homes,” the report found. 

Preparing for Change

As Realtor.com states, if the Bill’s provision to “update FHA lending standards and draw schedules to give manufactured and modular housing financing parity with traditional, site-built home,” goes into effect, developers and landowners nationwide can be set free to take advantage of the speed and affordability created by reclassification of the category. 

Developers with option agreements, pre-developed land, or banked acreage should be getting ready for the possibility of an entirely new business model being thrust upon them should the Bill be enacted.

With faster build times, more affordable materials, streamlined, top-down approvals, and federal mandates, inventory can enter the market more quickly, become better aligned with market forecasts, and even be timed better with environmental concerns—e.g., hurricane season in the southeast or winter in the Rocky Mountain west. 

Because the Bill encourages pre-approved designs, manufacturers and developers can begin due diligence on how a potential community can come together, tie in equally motivated lenders marketing loan programs, and thus reduce new inventory delivery times—in some cases, by years. 

Real estate asset management company Walton stated in a recent Insights Newsletter that home builders are relying on control alternatives, like banking and options, to alleviate long-term carry costs, specifically because of market conditions.

“Major homebuilders, including Lennar and D.R. Horton, are increasingly relying on land banking and lot option contracts rather than outright land ownership,” the company stated. “These strategies reduce upfront capital expenditures and allow companies to scale operations based on market demand.” 

With what’s possible for the housing market given the provisions outlined in the 21st Century Road to Housing Act, the market demand they’re waiting for could be closer than it's been since 2006.