Modular Homes Vs. Prefab (Differences Explained!)

All modular homes are prefab, though not all prefab homes are modular. The term “modular” represents a specific kind of construction; while the term “prefab” –short for prefabricated– is a broader term encompassing all those construction methods that take place in a factory-like setting. Since modular homes are a type of prefab, the comparison of modular homes vs. prefab is not possible. We can instead compare modular homes to other houses that are as well a type of prefab.

There are three main types of prefab house construction in the United States:

  • Modular homes
  • Panelized homes
  • Manufactured homes (also known as mobile homes)

Being all prefabricated homes, each one of these types offers different housing solutions with distinctive designs and construction processes. All of them are built up to a minimum quality requirement and offer a great housing solution. However, despite being all built in a factory-like setting, they show some big differences reflected on aspects such as their safety standards and the overall cost. 

The main prefab homes

Modular homes: 

Modular homes are a type of prefab construction that are built per sections known as modules. These modules are three-dimensional pieces of the house built in a factory-like setting and shipped to the building site where they will be assembled and set on a permanent foundation. 

These modules are whole sections of the house and are manufactured off-site up to completion, including the structure and finishes of walls, roofs and floors; but also built-in cabinets, bathrooms, plumbing, wiring and HVAC.

The construction process of the overall modular home is divided into in-factory construction (prefab) and on-site construction. More than 70% of the overall construction takes place in the factory [1], the remaining works represent no more than a 30% of the process but are an essential requirement to obtain the finished and fully functioning house.

Panelized homes: 

This type of prefab house is built per panels: wall, roof or floor systems that are manufactured in a factory-like environment. These panels are two-dimensional and generally include doors, windows and even wiring. 

Once the in-factory process is finished the prefabricated panels are shipped to the building site where they will be assembled on permanent foundation and assembled to form the three-dimensional volume of the house to obtain the overall envelope of the house. The remaining works required to obtain the finished and fully functioning house are carried on-site.

Manufactured homes: 

Manufactured homes are the updated version of the old style “mobile homes”, conceived as a one unique volume that can be easily transported as a whole. Manufactured houses are built on a steel frame foundation that will grant the stability of the building even when not affixed into on-site foundations. 

This type of prefab home is 100% prefabricated since the entirety of the manufactured home building process takes place in a factory-like environment. Once a manufactured home leaves the factory is usually fully furnished and ready to be lived in.

Differences between Modular, Panelized and Manufactured homes

The main differences between modular, panelized and manufactured homes are based on the following aspects:

  1. Permanent or relocatable construction
  2. Design and size customization options
  3. Safety Standards and building regulations
  4. Building cost
  5. Financing options

Permanent or relocatable construction

Modular and panelized homes are always designed and built as permanent constructions, built and attached to their foundations just as any other site built construction. However, manufactured homes are the new “mobile homes”, meant to be mobile and therefore always designed to be relocatable. 

It is common for manufactured homes to be purchased as permanent homes that once placed on land will remain in the same location for most of their life [2]. Though, despite the possibility of using a manufactured home as a substitute for a permanent structure, it is always built as a moveable building, stable on itself and fully finished as soon as it leaves the factory. While modular and panelized homes will require site works before being considered fully finished and ready to use. 

Design and size customization options

Modular and panelized homes can be designed in a variety of different shapes, sizes and styles, similarly to site built houses. These types of prefab homes are assembled on site and even if their components are built off-site, the design and size possibilities are endless. 

Per contra, the design and size possibilities of manufactured homes are limited. Being conceived as relocatable constructions, the entirety of the house needs to be transportable. The whole house is built on a steel chassis foundation designed to be attached on a truck which limits the shape and size possibilities of these houses.

Safety standards and building regulations

Since to the date, every prefab home is required to stick to some sort of building regulation, the minimal safety standards are certified with any of these three constructions built in the current time. However, there are some differences between the regulations to which modular, panelized and manufactured homes are required to adhere to.

Those prefabricated homes that are built as permanent constructions such as modular and panelized are required to stick to the state and local building codes defined by the area where the building site is based, just like any other site-built construction. In general, this codes contemplate the unique dangers associated to that particular location and ensure the house is built to withstand them. 

Modular and panelized homes built in Florida for example, are going to be safe in from of hurricanes because Florida’s Building Codes have been carefully design to ensure those buildings placed in hurricane prone areas are built to withstand extreme winds [3]. 

On the other side, those non-permanent prefab constructions such as manufactured, having been designed to be mobile and not affixed to a permanent foundation in a particular spot, cannot be required to stick to any specific state or local building code. Manufactured homes are instead regulated in a national level by the Federal Manufactured Home Construction and Safety Standards, following the HUD Code [4]. 

While the HUD code takes safety seriously into consideration it cannot apply to all circumstances climates and circumstances equally. Those areas where extreme weather events such as hurricanes, tornadoes, earthquakes or heavy snow falls are common, will provide a safer shelter to those prefabricated houses that are built following the building codes rather than the HUD.

Building Cost 

Construction costs differences are noticeable among different types of prefab homes. Manufactured homes are conceived as affordable homeownerships offering houses with a cost per square feet that is up to a 50% more affordable than a traditional sit built home [5]. 

A manufactured home has a cost per square foot of around $30 to $60, while the average cost per square foot of a modular home is of $50 to $100 [6]. Modular and panelized homes are not as affordable as manufactured home, though in general, they still offer a building cost that is lower than traditional stick-built constructions. Modular homes tend to offer a better deal than panelized homes being in general up to an 11% more cost effective than panelized homes [7]. 

Financing Options

Different types of prefab homes will follow different financing procedures. Modular and panelized homes, given that are treated as permanent constructions will follow the same financing procedure as any other site built home. 

Manufactured homes though, need to follow a different procedure. Being conceived as a relocatable home, this kind of prefab construction is purchased as personal property instead of real state property, a title more similar to a vehicle than to a house and therefore will require special treatment. 

There are few options to obtain financing for a manufactured home and the most popular one is the one insured by the Federal Housing Administration (FHA) Loan, which considers manufactured homes without requiring the ownership of the land where they are based [8].

Modular, Panelized and Manufactured homes are all prefab structures 

Modular, panelized and manufactured homes are all prefab homes that share one big similarity: they are all built off-site in a factory-like setting. Being built off-site grants prefab homes with some advantages over site built constructions:

  • Safer Labor: Prefab homes, contrary to traditional on-site construction is carried in a controlled environment that highly reduces the probability of suffering work related accidents. Factories are equipped with specialized machinery and tools while offering an environment that is isolated from unexpected weather events. All these conditions provide prefab workers with a safer working environment [9]
  • Material cost is lower: Building off-site means the prefab home construction is centralized in one working space where every house built by that company will store the materials and tools needed. This centralization reduces the transportation needs since materials can be delivered in bulk and stored to be used in a number of different houses [10]. This particular situation of prefabrication in comparison to site built construction tends to translate into a more affordable offer.
  • Sustainable: The material and work centralization described above also translates into a more sustainable construction, since it eases the recycling and reusing of materials, while cutting off on transportation.
  • Labor cost is lower: Man labor and craftsmanship tends to increase the cost in on-site constructions. Off-site construction requires less man power since it counts with the usage of specialized machinery. Moreover, carpenters, plumbers and all the necessary construction workers are centralized in the same location, reducing transportation to site and improving coordination among them [10] which will as well improve productivity.
  • Building time is shorter: The prefabricated construction process is closer to an assembly line than it is to traditional on-site construction. Working indoors offers a controlled environment where no unexpected weather conditions will disrupt the works. The construction process of prefab homes offers reliable time managing with no delays.


  1. Hodbe, A., & Sober, R. (2019). Design of Modular Housing. International Research Journal of Engineering and Technology, 06 (09), 734-738. [107].
  2. (2020, May) 2020 Manufactured Housing. Facts Industry Overview Manufactured Housing Institute (MHI)
  3. Florida Building Codes Panel Built
  4. (2015, 9 July) What you need to know about the HUD Code Home FirstTM
  5. (2020, May) 2020 Manufactured Housing. Facts Industry Overview Manufactured Housing Institute (MHI)
  6. How much does it cost to build a modular home? Home Guide
  7. Lopez, D. & Froese, T. (2016). Analysis of Costs and Benefits of Panelized and Modular Prefabricated Homes. Procedia Engineering. 145. 1291-1297. 10.1016/j.proeng.2016.04.166.
  8. Financing Manufactured (Mobile) Homes U.S. Department of Housing and Urban Development
  9. Thurston Group (2019, November 15) The health and safety benefits of modular construction PBC Planning BIM & Construction Today
  10. Barber M., (2020, March 2) Everything you need to know about prefab homes. From costs to sustainability to financing CURBED Vox Media