What Is a Prefab Home?

A prefab, or prefabricated, home is often an affordable alternative to a traditionally constructed home. See what experts have to say about this type of home.

Manufactured home with porch and yard

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You’ve heard of mobile homes, manufactured homes, and modular homes, but did you know that all these structure types fall into one category of housing? Called prefabricated (or prefab) homes, these structures are built off site (often in a centralized factory or warehouse setting) and assembled on your property. Prefab homes are a fast and affordable option for housing that’s growing in popularity.

“Today, there is an even greater need for affordable housing in America due to low inventory and high demand nationally,” says Ramsey Cohen, director of community and industry affairs for Clayton, a manufactured home company. 

Studies show that the prefab housing market in the United States has increased about 28 percent from 2012 to 2022. Chances are good that you’ll see more and more of these structures on the market in coming years. But what are the pros and cons of these types of homes? Read on to learn how these homes are made and whether one is a good fit for your next purchase.

What Is a Prefab Home?

Prefabricated homes—typically called prefabs, or prefab homes—are homes that were built off site and moved to a lot of land after construction. This is in contrast to traditional homes, which are built on site and typically can’t be moved. Prefab homes are typically built in a factory setting before they’re moved to your lot. On the lot, they might need some finishing touches for assembly, but much of the work is already done.

“There are various types of prefab homes,” says Andrew Pasquella, a realtor at Sotheby’s International Realty in Malibu, California. “Manufactured and mobile homes are actually the same thing. Mobile homes were the name given to manufactured homes before 1976, and now all mobile homes are called manufactured post-1976. Manufactured homes don’t sit on a permanent foundation but rather on a chassis.”

Modular homes have a fixed permanent foundation that the home sits on, and the land is deeded to the homeowner, Pasquella says. Modular homes cannot be moved from the foundation once assembled.

“These homes must meet all the same construction requirements that a traditional frame-built home would meet,” he says. “These are just homes built off-site and then delivered in modules. Modular homes can be placed anywhere a typical home can and are built following all traditional permits and zoning laws.”

Types of Prefab Homes

  • Mobile: Mobile homes are prefab homes built prior to 1976. They were mass-produced to meet demand for affordable, movable housing after World War II and received little oversight when it came to building specifications.
  • Manufactured: The HUD (Housing and Urban Development) Code went into effect in 1976, and the modern manufactured home was born. The term “manufactured home” refers to homes built to the federal HUD Code standard. Today’s manufactured homes are much different from the mobile homes built prior to 1976 in construction, safety, and design. These off site built homes are constructed to HUD Code with quality materials inside climate-controlled building facilities.
  • CrossMod: This is the newest category of home built to HUD Code. This home innovation bridges off site built construction with modern site-built home aesthetics and includes requirements such as a permanent foundation, drywall interior, a steeper pitched roof, and a covered porch, garage, or carport. A CrossMod home looks and feels like a traditional site-built home, but the price point is more affordable thanks to the efficiencies from off site construction.
  • Modular: Modular homes are also built off site in building facilities, like manufactured homes, but they meet local city zoning requirements, rather than the federal HUD Code. Both manufactured and modular homes have the option of being permanently placed on land.

Info courtesy of Ramsey Cohen, director of community and industry affairs for Clayton

How Prefab Homes Are Built and Maintained

Unlike stick-built single-family homes that are constructed on site, prefab homes are built in a climate-controlled factory setting. Stick-built homes rely on good weather for speedy completion. They’re also exposed to that weather until they’re completed, and in some cases rain or snow can warp wood and drywall.

Because prefab homes are built off site in controlled environments and with materials that are familiar to the company building the home, construction times are often much faster than building a home on site,” Pasquella says.

The construction setting also provides plenty of other time-saving benefits.

“[Prefab] homes are mainly constructed inside a building facility, away from potential delays and using production line efficiencies,” Cohen says.

But prefab homes do have some pitfalls.

“Just because the house was built in a factory setting doesn’t mean an owner is spared the typical homeowner duties,” Pasquella says.

Regular routine maintenance is a part of any homeownership, but a prefab homeowner will need to pay special attention to the level of the house over time.

“If it's not level, cracks and leaks can form and windows and doors won’t close properly,” Pasquella says of manufactured homes. “The enclosure that covers the chassis of the manufactured home should be checked to ensure proper insulation.”

For a modular home, you’ll want to check the roof and gutters regularly and also watch for settling, which could affect windows and doors, he adds.

Should You Buy a Prefab Home?

Prefab homes can be an affordable option if you’re looking to get your first home. Pasquella says they’re typically cheaper to construct than a full custom build, but you may pay more if you’re looking for something specific.

“Pricing for prefab homes can really run the gamut these days,” Pasquella says. “Depending on the type of prefab home, there are a number of companies making architectural, luxurious, and large prefab homes that can rival any custom-built home.”

Generally, though, a standard prefab home will be less costly than a comparable stick-built home. Cohen says the lower costs come from the construction method.

“Off site built homes are a more affordable home option for individuals and families due to a variety of reasons: Building materials and appliances are purchased in bulk and distributed to the network of building facilities nationwide, forwarding the savings to our customers,” he says. “Building efficiencies inside the facilities, like production line assembly and utilizing leftover building materials, also aid in driving down the overall cost of construction.”

If you want to consider this type of property, Pasquella suggests working with a real estate agent and lender who have experience buying and selling them. Then, make sure you understand everything you can about the type of property you’re considering.

“First, know what type of prefab home you’re buying,” he says. “Is it a manufactured home or a modular home? Know if you own the land or not. Often, manufactured home sites are only rented, so a buyer could potentially miss out on any land appreciation. Manufactured homes will often appraise less, while modular homes will appraise in the same manner a traditional home will.”

That value appreciation is something to consider while buying because it could make a huge difference when you look to sell.

Finally, prefab homes can be customized depending on the builder you choose.

“Every company for both manufactured or modular homes will have different options to review,” Pasquella says. “There is typically some level of customization available, whether it’s adding square footage or changing the layout.”

At Clayton, customizations include options for cabinets and flooring, built-in features and storage, bathroom finishes, kitchen appliances, and more, Cohen says.

“In addition, certain home models also allow buyers to choose from different floor plan configurations,” he says. “This includes adding flex spaces, bedrooms or choosing a specific primary bedroom layout.”

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