New Housing Law Boosts Prospects for Factory-Built Homes

New Housing Law Boosts Prospects for Factory-Built Homes

Landmark legislation cuts building costs up to $10,000, but local regulations or financing issues trip up this type of construction

By Lily Belle Poling, WSJ

Aug. 18, 2026 10:40 am ET

A new federal housing law aims to make it easier and cheaper to build modular and manufactured homes in the U.S.

Homes built in factories have long been stuck at the fringe of the U.S. housing market. Now, supporters are cheering a new federal housing law that should make it easier and cheaper to build modular and manufactured homes.

Modular homes are built in pieces at a factory and assembled on site, and they often appear quite similar to traditional, stick-built houses. Manufactured homes—often referred to as mobile homes or trailers—are built entirely at a factory and shipped whole to their destination.

The new law aims to slash some of the red tape associated with both these alternative housing types.

One provision, which removes the requirement that manufactured homes come with the permanent steel frame used for transporting the houses, means that they can be built for roughly $5,000 to $10,000 less than before, according to Andrew Justus, a housing policy researcher at the Niskanen Center.

For some homes, those savings to home buyers could equal more than 10% of the original cost.

Other provisions in the bill direct the Department of Housing and Urban Development, or HUD, to identify financing barriers to modular housing and study the utility of implementing a federal standardized building code for modular housing, similar to what exists for manufactured homes.

Modular construction often receives outsize attention compared with its relatively small footprint because some housing analysts suggest that its mass production could offer a solution to America’s housing crisis. The new law provides a glimmer of hope that the federal government was moving to streamline that production.

“America’s really, really behind, and this is a huge, huge opportunity in America, especially with the roughly around seven million home-unit shortage that the country faces right now,” said Mark Turnbull, the founder and chief executive of St. Louis-based Module Building Systems.

According to U.S. Census Bureau data, 102,700 units of manufactured housing were shipped last year, and 37,528 modular units were completed in 2024.

Modular housing tends to look quite similar to traditionally built homes. But some buyers remain wary about living in a house that was built in a factory, especially because they often confuse modular homes with the manufactured ones more commonly called mobile homes.

“I would’ve never guessed it was modular until I got inside,” said Tom Schmitt, a 44-year old appraiser who has lived in a modular home in Pennsylvania for 16 years. “It was a nice big house, had some nice amenities and stuff with it, so that was really the appeal.”

Schmitt only realized the house was modular after going down to the basement, where he could look up and see where the modules of the house were connected together.

Still, even with momentum from the new housing law, many industry leaders say this federal assistance won’t go far enough. National housing policy can only do so much in a country made up of a patchwork of disjointed state and local building regulations.

The law doesn’t create a national building standard for modular construction, the type of overhaul experts say is necessary for the U.S. to scale factory-built housing. Instead, it directs HUD only to study the idea, with no deadline or requirement that a standard actually result.

Countries like Sweden and Japan have succeeded at producing modular housing at scale, largely thanks to standardized building codes that allow factories to run at high volume without customizing units for every town boundary.

In contrast, the U.S. off-site construction market remains stunted, with its national market share flattening at just 3% of completions.

“Every city, every municipality has a different code. That fragmentation prevents the scale economics from taking off,” said Michael Tillman, CEO and co-founder of real-estate developer PTM Partners, which works on modular projects. “You look at Germany, look at Japan, look at Sweden—they have a national code, and that national code standard lets you actually run the modular factory at volume because what you build in Kyoto is approved in Osaka.”

In the apartment business, the largest operator is experimenting with modular projects. Greystar Real Estate Partners is developing apartment buildings with modular construction in Pennsylvania and Massachusetts.

And alternative construction methods, from modular to 3-D printing, have gained some traction with victims of hurricanes, wildfires or other disasters, from California to the Southeast. Some of these displaced homeowners can be desperate to rebuild, but their insurance payouts are often well short of what is needed to cover traditional construction costs.

But developers can still run into challenges financing modular housing. Traditional bank loans only pay out money step by step as a house is built on site, while modular factories need a large portion of the cash upfront just to buy materials and start assembly. On top of that, because these homes are less common, cautious banks don’t know how to price them and often treat them as higher risk.

The new law includes a provision meant to resolve some of those financing hurdles. The act directs HUD to identify barriers to financing programs for modular housing.

“My read of it is it’s really a study and rule-making directive. It’s not a policy change,” Tillman said. “I think it’s signal, not substance.”