Key facts
- California's new law aims to reduce red tape and project risks for qualifying factory-built housing projects.
- Federal action on financing and production capacity is seen as important but less immediately impactful than state and local rules, according to industry leaders.
- Connecticut's proposed bill for safety reviews of prefabricated affordable developments did not pass, with a working group to study construction methods instead.
- The 21st Century ROAD to Housing Act directs federal agencies to examine financing and regulatory barriers for manufactured housing.
- Financing remains a constraint for modular builders due to upfront factory costs compared to conventional construction loans.
- Philadelphia, Cleveland, New York, and Baltimore are cities pursuing modular-housing incentives, factory recruitment, or faster permitting.
- Seven states have adopted ICC/MBI 1200 standards addressing factory inspections and quality control.
- Vessel Technologies' proposed projects in Connecticut raised questions about fire-rated assemblies and completeness of design documents.
- The Hallandale Beach Community Redevelopment Agency authorized payments up to $11.2 million for 53 factory-built apartments.
- California has regulated factory-built housing since 1969, with recent legislation building on the existing framework.
States are making more significant policy gains on factory-built housing than the federal government, with California recently enacting legislation to streamline the delivery of such homes. The new California law curbs several local building standards and adjusts inspection and fee rules, aiming to reduce chronic red tape and project risks for qualifying factory-built projects.
Industry leaders, including Tom Hardiman, executive director of the Modular Home Builders Association and the Modular Building Institute, stated that state and local rules have had a more immediate impact on projects than federal action. While acknowledging the importance of federal efforts, Hardiman noted that the federal 21st Century ROAD to Housing Act, passed three months ago, is a useful step but not a near-term breakthrough, as it primarily directs agencies to study financing and regulatory barriers.
Financing remains a central constraint for modular builders, who incur significant offsite factory costs before units reach a site, unlike conventional construction loans that disburse funds as work progresses onsite. Federal policymakers initially focused on manufactured housing, but industry advocates pushed for language defining modular housing as a separate sector with its own specific barriers.
In contrast, state and local actions are showing more immediate consequences. Cities like Philadelphia, Cleveland, New York, and Baltimore are pursuing modular-housing incentives, factory recruitment, or faster permitting. Philadelphia issued a solicitation seeking factory interest, and Cleveland recruited MMY US to open a second plant. These efforts can link affordable-housing production with municipal economic-development goals by creating local jobs and supplying housing.
At the state level, seven states have adopted ICC/MBI 1200 standards, which address factory inspections and quality control, reducing friction for manufacturers selling across state lines. However, zoning can still pose a barrier, as modular projects can be inadvertently restricted by rules aimed at HUD-code manufactured homes.
The debate over standards was highlighted by Connecticut's failed proposal this year for added safety-review requirements for prefabricated affordable developments. Sponsors launched a working group to study emerging construction methods and life safety, which may recommend changes before the 2027 legislative session. This proposal stemmed from disputes over Vessel Technologies' steel, factory-built system for multifamily housing, with local officials questioning fire-rated assemblies and design completeness, while Vessel argued that early demands could create entitlement risk.
Florida's Hallandale Beach Community Redevelopment Agency recently selected Vessel Technologies for an affordable-housing deal, authorizing up to $11.2 million for 53 factory-built apartments. This public-sector deal allows Vessel to test its product, with the agency owning the buildings to address its housing needs. Vessel will handle permitting and delivery under a fixed-price contract, offering the agency greater certainty over scope and cost.