Manufactured homes just got a little cheaper to build.
A provision in the 21st Century ROAD to Housing Act removes the federal requirement that homes be built on a permanent steel chassis, and the change could save builders $5,000 to $10,000 per home, according to Andrew Justus, a housing policy researcher at the Niskanen Center. For some buyers, that’s more than 10 percent of a home’s original cost.
That number should look familiar to Inman readers — it’s the same range Inman reported in July, when NPR first put a figure on the chassis change. Now there’s a name behind it.
Modular housing didn’t get the same treatment, though. The law directs the U.S. Department of Housing and Urban Development to study financing barriers facing modular construction and evaluate whether a national standardized building code, something manufactured housing already has, makes sense for modular homes, too.
Modular is where some housing analysts see the bigger opportunity. Modular homes are built in sections at a factory and assembled on site, often indistinguishable from traditional stick-built houses, while manufactured homes are built whole at a factory and shipped to their destination.
Modular’s mass-production potential has drawn attention as a possible answer to the nation’s roughly seven-million-unit housing shortage, but its national market share has flattened at around 3 percent of completions.
Local building codes are a big reason why. Every city and municipality sets its own rules, unlike in countries such as Sweden, Japan and Germany, where national code standards allow modular factories to run at volume because a home approved in one city is approved everywhere.
Developers financing modular projects also face a structural mismatch with traditional bank loans, which pay out step by step as a house is built on site, whereas modular factories need a large share of the cash upfront to buy materials and start assembly, and cautious lenders often price that risk higher.
Real estate professionals working markets with meaningful manufactured or modular inventory shouldn’t expect either provision to move the needle immediately. Sarah Brundage, president of the National Association of Affordable Housing Lenders, has said any effect on housing supply takes years to materialize, since a single development can take longer to complete than an elected official’s term in office.
None of these changes typically happen fast, and the modular study doesn’t have a deadline attached.
