A CrossMod manufactured home.
Clayton Homes

Could manufactured homes be the next big thing in housing? 

Prefab homes don't have the sexiest reputation, but modern styles mimic traditional homes — and could make homeownership more attainable.

July 13, 2023
4 minutes

Key points:

  • A new Harvard study says manufactured homes can help address housing affordability, and low production represents a "missed opportunity."
  • One newer style, CrossMod, looks similar to a traditional single-family house with features like attached garages and covered porches.
  • Construction costs are significantly lower for all types of manufactured homes compared to site-built homes, according to the report.

Manufactured homes have come a long way. With home prices and construction costs on the rise, prefab homes — sometimes maligned or dismissed as inferior to their site-built cousins — could be a more affordable and even desirable solution. 

A new study from Harvard University's Joint Center for Housing Studies found that manufactured housing holds promising opportunities to expand homeownership, particularly as construction costs remain significantly lower for manufactured homes compared to homes built on-site.

Even the costliest style of prefab home offers significant savings, according to the report, which noted that single-wide, double-wide and CrossMod manufactured homes cost 35%, 60% and 73%, respectively, as much as comparable site-built homes.

"The principal implication raised by these findings is that today's relatively low level of production of manufactured housing represents a missed opportunity to expand homeownership and improve housing affordability," the report concluded.

Modern manufactured homes don't fit the prefab stereotype

The CrossMod style of manufactured homes — which most closely resembles a traditional single-family home — may be especially appealing to first-time home buyers.

Developed by the Manufactured Housing Institute (MHI) in 2016, CrossMod is a relatively new style of home that includes features like a garage, covered porch, elevated pitched roof and higher-end interior features not typically associated with manufactured homes. Such features not only make them more attractive to buyers, but communities are less likely to oppose them since they blend in with neighboring homes.

Beyond the aesthetics, modern manufactured homes may be easier to purchase, as they qualify for more traditional forms of financing, according to the report.

Manufactured homes also appear to be a priority for the federal government. The U.S Department of Housing and Urban Development announced last month that it has created the Office of Manufactured Housing Programs, an independent office.

Built with efficiency in mind

One of the largest manufacturers of homes built off-site, Clayton, is leaning hard into energy efficiency. The company recently announced it is now taking orders for "eBuilt" homes that will meet Department of Energy (DOE) Zero Energy Ready Home specifications by January 2024. These homes, which are built to allow for solar panels, are expected to significantly reduce energy costs. 

A spokesperson for Clayton told Real Estate News that eBuilt homes "can offset up to 100 percent of the home's energy use when combined with a renewable energy system, such as solar panels."

"We are driven to make energy-efficient homes an attainable option for home buyers across the country," said CEO Kevin Clayton. "Energy efficiency is crucial for lowering monthly utility costs and maintaining long-term affordability."

The company noted that it has 39 facilities across the country producing eBuilt homes, allowing it "to scale attainable energy-efficient homes to a nationwide audience" and complement other types of construction. "For developers, CrossMod homes add a housing tool to their toolbelt. We are able to come alongside these partners to help relieve some of a developer's labor pressure," said the spokesperson. 

Production trending upward

The production of manufactured homes is on the rise, with nearly 113,000 shipped out across the U.S. in 2022, the highest annual total since 2005, according to the U.S. Census Bureau. A decade earlier, the number was just under 55,000.

While on the upswing, the current production of manufactured homes is still much lower than in the 1990s, when annual levels were in the 350,000 range. According to the Harvard report, loose credit standards led to the manufactured housing boom, which was followed by the subprime crisis bubble. Many lenders decided to stop offering financing or tightened credit standards for manufactured homes, leading to a drop in production.

The report found that historically, access to conventional mortgage has been a key barrier to more widespread adoption of manufactured homes, noting that traditional manufactured homes are frequently financed with personal property loans that usually have higher interest rates.

MHI noted that with CrossMod homes, both Fannie Mae and Freddie Mac have developed special financing programs with thousands of lending partners.

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