Modular Homes: Affordable Answer to Home Ownership this 2025
The dream of homeownership feels increasingly out of reach for many Americans. Soaring home prices and rising interest rates have created a perfect storm, making it incredibly challenging for first-time buyers and even seasoned home seekers.
Because of the escalating costs of traditional homes and rising mortgage interest rates, many prospective homeowners explore alternative housing solutions. One such solution gaining traction is modular homes.
What You Need to Know About Modular Homes
According to HUD, modular homes are constructed using individual sections, called modules, built in a factory, and assembled on site. Modules can be of different types- fully enclosed modules, partially open-sided modules, or open-sided modules (HUDuser.gov). HUD adds that modular homes are constructed to the same state, local or regional building codes as site-built homes.
The main difference between manufactured and modular homes is that manufactured homes are built to the national HUD code, while modular homes are built to all applicable state and local building codes. This makes modular homes more like traditional site-built homes, just faster and cheaper to construct.
Why the Dire Need for Affordable Housing
The most recent reappearance of housing insecurity in the US was during the wake of the 2007-2009 Great Recession, during which Americans were squeezed out of the housing market because demand far exceeded the supply of new housing units (Center for American Progress, 2022).
The March 2024 report of the National Low Income Housing Coalition (NLIHC) showed that the U.S. face a shortage of 7.3 million affordable and available rental homes, resulting in only 34 affordable and available homes for every 100 extremely low-income renter households1 (NLIHC, 2024). More alarmingly, the report showed that it got worse compared to the pre-pandemic figures, with a 480,000 increase in the shortage of affordable and available rental homes for extremely low-income renters between 2019 and 2022.
Among all the states, California topped the list of the most number of extremely low-income renter households, having 1,282,835 as of March 2024, with the state of Georgia following at number eight, having 325,237 such households. California only has 24 affordable and available rental homes per 100 extremely low-income renter households, and Georgia only has 34 such homes. However, topping the list when it comes to extremely low-income households with severe cost burden is Nevada at 86%, Georgia ranking fourth together with Oregon for having 78% such households, and California following at fifth place with 77%.
Modular Homes- Old Solution Regaining Attention
Modular homes have emerged as a compelling option because of their affordability, cost efficiency, reduced construction time, energy efficiency, and sustainability.
Affordability and Cost Efficiency
Modular construction has many potential benefits, including cost savings, shorter development timelines, and an overall safer and more efficient development process (Galante, Draper-Zivetz & Stein, 2017). Modular homes are constructed off-site in controlled environments, which significantly reduces labor and material costs. This method allows manufacturers to purchase materials in bulk and minimize waste, resulting in lower overall expenses. Consequently, modular homes are more affordable than traditional site-built houses, making homeownership attainable for a broader range of buyers.
Reduced Construction Time
The off-site construction process of modular homes enables simultaneous site preparation and building fabrication, leading to a substantial reduction in construction time. This efficiency allows homeowners to move into their new residences more quickly compared to traditional construction methods. The shorter construction period and quick assembly can shave up to 50% of the overall construction time leading to savings related to labor and financing.
Energy Efficiency and Sustainability
Modular homes are often designed with energy efficiency in mind, incorporating features such as superior insulation, energy-efficient windows, and sustainable building materials. These elements contribute to lower utility bills and a reduced environmental footprint, appealing to eco-conscious buyers. The controlled manufacturing environment also ensures precise construction, enhancing the overall quality and durability of the home (Modway Homes, 2025).
Financing Options
While financing for modular homes can present challenges, there are programs available to assist buyers. For instance, the HomeReady program is designed to help low- to moderate-income buyers with limited cash for a down payment to purchase a home. It covers manufactured homes, offering reduced mortgage insurance costs, interest rate reductions, and other benefits to eligible borrowers (The Mortgage Reports, 2025).
Market Trends
The demand for modular homes is expected to rise in 2025 and beyond, driven by their affordability and the increasing need for efficient housing solutions. The value of global modular construction stood at about USD 63.19 billion in 2024 and forecasted to reach a global market value of USD 180.94 billion by 2034 (Expert Marker Research, 2024). The US modular construction market is forecasted to have a compound annual growth rate (CAGR) of 11% between 2025 and 2034, the report states. Clearly, investors and developers are recognizing the potential of modular construction to address housing shortages and provide cost-effective alternatives to traditional building methods
Conclusion
Modular homes offer a viable and attractive option for homebuyers in 2025, providing advantages in affordability, construction speed, energy efficiency, and sustainability. As the housing market continues to evolve, modular construction stands out as a practical solution to meet the needs of modern homeowners.
1Extremely Low-Income Households (ELI)- households with incomes at or below either the federal poverty guideline or 30% of area median income (AMI), whichever is higher (NLIHC)
References
HUDuser.gov. (n.d.). Single-Family Site-Built, HUD Code Manufactured, and Factory-Built Homes. Retrieved from https://www.huduser.gov/portal/sites/default/files/pdf/Info-Brief-SingleFamilyHomeowners.pdf
Center for American Progress. (2024). Increasing Affordable Housing Stock Through Modular Building. Retrieved from https://www.americanprogress.org/article/increasing-affordable-housing-stock-through-modular-building/
National Low Income Housing Coalition. (2024). The Gap: A Shortage of Affordable Homes March 2024. Retrieved from https://nlihc.org/sites/default/files/gap/2024/Gap-Report_2024.pdf
Carol Galante, Sara Draper-Zivetz, and Allie Stein, “Building Affordability by Building Affordably: Exploring the Benefits, Barriers, and Breakthroughs Needed to Scale Off-Site Multifamily Construction” (Oakland, CA: Terner Center for Housing Innovation at UC Berkeley, 2017), available at http://ternercenter.berkeley.edu/uploads/offsite_construction.pdf.
Lakhani, Bhavinbhai. (2024). The Role of Prefabrication and Modular Construction in Reducing Construction Time and Costs.
Modway Homes. (2025). Pros and cons of buying a modular home in 2025. Retrieved from https://modwayhomes.com/pros-and-cons-of-buying-a-modular-home-in-2025
The Mortgage Reports. (2025). Manufactured home interest rates | Loans 2025. Retrieved from https://themortgagereports.com/21473/manufactured-home-mortgage-loan
Expert Market Research. (2024). Global Modular Construction Market Outlook Report – Market Size, Share Analysis and Forecast (2025-2034). Retrieved from https://www.expertmarketresearch.com/reports/modular-construction-market#:~:text=The%20industry%20is%20further%20expected,and%20time%2Dsaving%20construction%20solutions
