Thinking About Building a Prefab Home? Here’s What You Need to Know

The appeal of a prefab house is clear, but the process of getting one is not.
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Ever wonder how a factory-built home gets from Point A to Point B, or what the difference is between modular and panelized construction? Read on for our primer on prefab housing. 

What is a prefab home? 

A prefab home is any home that has been built, partly or fully, in a factory. The design may be fully preset, partly modified by the client, or completely made-to-order. Some companies are one-stop shops that coordinate everything from land selection to landscaping; others drop modules at the site and leave the rest to the client. 

How common are prefabs? 

Ryan Smith, the director of the School of Design + Construction at Washington State University, estimates that in most parts of the country, less than one percent of houses are built using prefab techniques. (Pennsylvania, an epicenter of housing factories, is a notable exception; the figure there is closer to 25 percent.) Because the industry is less mature in the U.S. than in places like Japan and Sweden, it’s important to find partners with enough experience to have worked the kinks out of their system, and enough scale to take advantage of the potential efficiencies. 

Transforming shipping containers into habitable spaces is a growingly popular subset of prefab. Just off the Delaware River in Pennsylvania, Martha Moseley and Bill Mathesius adapted an unused concrete foundation to create a home made from 11 stacked shipping containers. "We were inspired by the site, and our desire to have something cool and different," says Moseley.

How do I get one? 

When Rebecca Gadd built her prefab home in Oregon, the company she selected, Stillwater Dwellings, was involved almost every step of the way. She chose a model from the company’s catalogue, worked with company representatives to customize it slightly, and even got the company’s help in finding a local contractor to assemble and finish it. 

That’s one path to prefab, but far from the only one. Some companies have architects on staff who work with clients to design fully custom homes that are then built in a factory. Others will work with outside architects to modify any design for factory production. "It’s more work in a shorter period of time, but that translates into fewer surprises later," says Brian Abramson, cofounder of Seattle-based Method Homes.

Another option is to seek out an architect who is not associated with a particular manufacturer but whose practice focuses on prefab, such as Resolution: 4 Architecture in New York, winner of a 2003 Dwell prefab competition. That firm partners with carefully selected factories across the country to manufacture one-off homes molded to their context. "Our focus is mass customization, that is, design something specific yet execute it using mass production techniques," says cofounder Joseph Tanney. 

What’s the difference between modular and panelized? 

One of the first questions likely to arise in your search for a company is whether to go with modular or panelized construction. Modular homes (also called volumetric modular) are pieced together building block style from factory-made pods, while panelized homes arrive at the site in the form of flat panels. Many companies specialize in one or the other. Manufactured homes—often called mobile homes or trailers—are also prefabricated, but follow different standards than panelized and modular, which must meet the same local and state codes as site-built homes. Kit homes (also called pre-cut) are a fourth option for DIYers who want little or no contractor assistance. 

In general, panels allow for more design flexibility and are more efficient to ship than modules because they are flat-packed. Depending on the company, however, they may consist of little more than roughly framed walls that demand extensive work to assemble and finish on-site. Modules, by contrast, typically arrive in a highly finished state, which means they require less time and local labor to complete. However, state highway laws limit their size, so their dimensions usually don’t exceed 60 feet long by 16 feet wide by 11 feet high. 

Many prefab architects and suppliers specialize in either modular or panelized construction. Minneapolis architect Charlie Lazor has worked with both mediums. This lake house in rural Ontario, Canada, is an example of one of his modular projects. It was built in a Wisconsin factory about 400 miles away.

What about shipping? 

If you want a modular home, large, bulky volumes must be delivered to your site. That can be difficult in dense urban neighborhoods and remote rural settings. Jennifer Siegal, who has been designing prefab homes since 1998 at her firm OMD, says that if a garbage truck can get there, an eight-foot-wide module usually can, too. But power lines—especially high-voltage ones—can still hinder delivery. 

Location may limit your choice of companies. Siegal only serves a radius of about 500 miles from her Los Angeles office, since shipping beyond that is too inefficient—although some firms serve a much wider area. Finally, remember that building a prefab home isn’t like buying a new car. Even with a preset design, you will still need to prepare your site, obtain permits, and customize some aspects of the plans to meet local codes. 

Is it true prefab homes are more affordable? 

For Marfa, Texas, residents Don and Linda Shafer, building a prefab home translated into huge savings. They estimate that their house, designed by Ma Modular, cost about half what a similar site-built one would have, largely because Marfa is remote and labor there is expensive. "We’re three and a half hours from a Home Depot. You screw up an order, you’ve just delayed things at least a week," Don says. 

At $135 per square foot, Don and Linda Shafer’s prefab home in Marfa, Texas, cost significantly less than a site-built one would have—even with transport expenses. 

It’s true that prefab houses are often faster to build because site prep can take place at the same time as home construction. That means shorter construction loans (which usually have higher interest rates than mortgages), and less money spent on rent while waiting to move in. Total cost also tends to be more predictable—so much so that companies like Plant Prefab in California offer fixed-price bids, not estimates. 

Last year, Amazon’s Alexa Fund invested in Plant Prefab—the same home building startup that helped create this indoor/outdoor dwelling in Beverly Hills, Los Angeles.

That said, savings as dramatic as the Shafers’ are not the norm. A more common industry claim is that prefab is 10-to-20 percent less expensive than traditional methods, and some homeowners, like Rebecca Gadd, say prefab didn’t save them much at all. Generally speaking, if labor rates are lower wherever the factory is located than they are at the building site, savings will ensue. If the opposite is true, they usually do not. 

Are prefab homes better for the environment? 

Quite a few companies advertise the sustainability benefits of prefab. While some builders specialize in eco-friendly models—constructing airtight homes with state-of-the-art technology in controlled factory environments—prefabs are not necessarily more energy-efficient than regular homes. 

One area where factory building does win out, according to Plant Prefab CEO Steve Glenn, is waste. Glenn says prefab makers tend to plan carefully and reuse leftover materials, which can cut landfill contributions by three quarters or more. 

In the end, Glenn’s advice to potential homebuilders may be the wisest: "You don’t start by saying I’m building prefab versus site. You start by saying I want a home that meets my needs." Then you search for a company or architect who can provide it—and maybe, just maybe, you end up with prefab.

Related Reading: 

The Ultimate Guide to Prefab: 65 Resources by Location, Construction, and Price  

The Definitive Guide to Prefab Home Companies in Your State