Why Modular Homes are Cheaper than Regular Homes

Modular homes are generally 10 to 20 percent cheaper than traditionally built houses [1]. They are a type of prefabricated construction that is built following a highly industrialized building process and centralizing most of the construction work in a factory-like environment. The uniqueness of the modular technique grants modular homes numerous advantages and some of these, beyond being a benefit by themselves, contribute to reducing the cost of modular home construction. 

Modular home advantages that lead to cheaper construction:

  • Fast construction timeline
  • Reutilization of the construction materials 
  • Optimization of transportation needs
  • Pre-designed floor plans

Being affordable prefabricated constructions, modular homes often bring up doubts about their quality standards. Certainly, nowadays it is common for products to manage to reduce their final cost by cutting down on quality, though this is not the case with modular homes. 

Why is modular construction more affordable?

Modular construction is more affordable than traditional construction as a result of its unique construction process. This process is quite different from what we are used to seeing in traditional construction: while traditional homes are built entirely on the building site, most of modular home construction takes place off-site in a highly industrialized manufacturing plant. There, every module is raised following a process that is closer to an assembly line than to a traditional construction procedure. 

The prefabrication phase covers as much as 70% of the overall modular home construction [2], and as a Modern Method of Construction (MMC), it does so by relying on mass production and repetition [3]. The mechanization and centralization of the works grant this method with great benefits that contribute to lowering the cost of modular home construction. 

Fast construction timeline 

Building a house on-site with traditional construction methods rarely takes less than 8 months [4], though with modular construction this timeline is often highly reduced. From the moment the manufacturing process starts until the modular home is ready to be lived in, it usually takes as little as 4 months [5][6][7].

Industrializing the building process highly accelerates and reduces the cost of the overall construction of the modular home. A great number of construction works are mechanized which consequently reduces the human workforce demands and fewer hours of labor directly translates into fewer labor expenses.

Additionally, modular construction can guarantee compliance with the building timeline on nearly all occasions. Most of the delays experienced by on-site construction are due to harsh weather events and modular construction hardly ever experiences construction delays. The protected environment where the modules are manufactured offers ideal working conditions regardless of the weather all year long. 

Reutilization of the construction materials

Traditionally built houses tend to have great amounts of material leftovers once the construction works are finished. Modular construction, on the other hand, usually optimizes the materials. Since modular home manufacturers build all their houses in the same space, it is common to store all the construction materials in the same location. 

This centralization of work and material storage enables the reutilization of previous cuts and leftovers. Any piece of material that has been unused in a previous house, can be easily stored and reutilized in a future house, highly cutting down on the material’s cost [8]. 

Optimization of the transportation needs

The centralization of modular construction works highly reduces transportation needs in comparison to traditional construction which positively impacts the final cost. Building a house using traditional construction involves constant transportation of materials, machines, and workers to and from the building site. Modular construction, on the other hand, cuts these movements down enormously. 

Since all the modular construction works are centralized in the same location, it makes sense for the manufacturers to store the materials in the same place, cutting down completely on their transportation to the building site. The shipment of machinery is also eliminated given that all the necessary construction machines are already incorporated into the factory. Also, given that all construction workers and specialists meet in the same place to work on each and every one of the houses, no conveyances are needed anymore. 

Certainly, the modules need to be transported from the manufacturing plant to the building site once built. While this shipment might look massive given the size of the objects being transported compared to the numerous shipments of materials, workers, and heavy machinery required in traditional construction, it has minimal impact on the overall price. 

Pre-designed floor plans

The mechanization of the construction often leads to a repetition of the different processes, easing the manufacturing of the same model repeatedly. It is very common then for modular home manufacturers to sell pre-designed homes. These homes have been designed, built, and tested previously, which lowers their cost enormously. Pre-designed modular homes can save up to $32 per square foot in comparison to fully customized designs [9].

In most cases, modular home manufacturers allow some customization in colors and different features. Though these customizations are minor and the process still benefits from a simplified design phase and a highly mechanized construction which enables predesigned models to require a much lower budget. 

Prefabrication lowers the cost though not the quality

Modular homes are cheaper to build, though this cost reduction is rarely the result of lowering their quality standards. Despite being prefabricated, modular homes are always built as permanent constructions and as such, they have to adhere to the local building codes. These codes certify that the quality of the materials and techniques utilized in the house’s construction will protect the house and its occupants from fires, floods, earthquakes, wind, rain, snow, and other weather events [10]. 

Therefore, even the cheapest modular home is built following the minimum standards of quality. Though generally, modular construction exceeds these minimum requirements as a result of its building process.

Factors that contribute to improved quality in modular construction:

  • Prefabrication enables strict quality controls: The centralization of the works enables a more thorough quality inspection throughout the whole construction process. 
  • The factory-like environment offers access to specialized machinery: The access to sophisticated tools and machinery eases a neater and finer work quality and finishes improving the overall quality of the modular home. 
  • Building off-site offers weather protection: Building in a sheltered environment provides a protected location avoiding possible damages and quality downgrades due to weather events such as changes in temperature, humidity, or frost.
  • Building off-site offers comfortable working conditions: Building indoors offers the ideal conditions for the construction work to be performed in a safe and comfortable way, which has a positive impact on the quality.


  1. Gardener, K. (2019, April 24) Prices of modular vs. Stick built homes The Nest https://budgeting.thenest.com/prices-modular-vs-stick-built-homes-23826.html
  2. Hodbe, A., & Sober, R. (2019). Design of Modular Housing. International Research Journal of Engineering and Technology, 06 (09), 734-738. [107]. https://www.irjet.net/archives/V6/i9/IRJET-V6I9107.pdf
  3. (2021, May 24) Modern Methods of Construction (MMC) – The future of construction in Ireland? A&L Goodbody https://www.algoodbody.com/insights-publications/modern-methods-of-construction-mmc-the-future-of-construction-in-ireland
  4. Zhao, N. (2015, August 17) How Long Does It Take to Build a Single Family Home? https://eyeonhousing.org/2015/08/how-long-does-it-take-to-build-a-single-family-home/
  5. (2019, August 15) How Long to Build a Modular Home? Design Build Modular https://designbuildmodulars.com/blog/how-long-does-it-take-to-build-a-modular-home/
  6. Discover a better way to build your home. Plant Prefab https://www.plantprefab.com/homebuyers/#process
  7. You have questions, we have answers Blu Homes https://www.bluhomes.com/fact-sheet
  8. Why Are Modular Homes Cheaper? Home Smitten https://homesmitten.com/why-are-modular-homes-cheaper/
  9. (2020, October 13) 5 Benefits of Pre-Designed Homes Kiawah Island https://www.kiawahisland.com/real-estate/pre-designed-home/
  10. (2018) IBC International Building Code ® ICC International Code Council https://www.ci.independence.mo.us/userdocs/ComDev/2018%20INTL%20BUILDING%20CODE.pdf