What is a modular home? 4 eco benefits for homeowners

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Benefits of modular homes

Modular homes, or those built in a factory, are a cost-effective housing alternative with a variety of eco benefits when compared to traditional, site-built homes. Like regular homes, they also have the ability to appreciate value and are covered by regular home insurance . We give you the lowdown on what a modular home is, what makes it different and the pros and cons of modular construction.

Feel free to jump ahead to the infographic to discover the many eco benefits of modular homes, or keep reading to learn more.

What is a modular home?

A modular home is a home built in parts known as "modules" by specialized workers in a factory. Each module or section is then delivered to a building site and assembled by a crew. Building a modular home requires a building permit and must adhere to local building code and zoning regulations.

How are modular homes different?

Modular homes are set apart from site-built and mobile homes because they are built in a factory, but they require a permanent foundation.

Modular homes vs. manufactured homes

While modular homes have permanent foundations, manufactured homes are actually movable. Manufactured homes are also made in a factory, but they are designed to be towed to a location and don't need a building permit. Manufactured homes only need to meet building requirements designated by the Department of Housing and Urban Development (HUD) and they require separate mobile home insurance.

Modular homes vs. mobile homes

Mobile home is the out-dated term for a manufactured home, according to the HUD. They're the same as manufactured homes and share the same differences outlined above. Even though the terminology has changed, many commonly refer to movable dwellings as mobile homes.




Modular homes vs. site-built homes

Unlike site-built homes, modular houses are built inside a factory in a shorter time frame. They take a matter of weeks to build, rather than months, because they are sheltered from weather-related delays. Modular homes are sometimes subject to different guidelines than site-built homes. Most U.S. states adopt some or all the standards listed in the International Residential Code.[1]

Modular homes vs. prefab

Prefab, or prefabricated housing (also called a prefab home), is a general term for any building with sections of it built in a factory and assembled later on the home site. Modular housing technically falls under this category.

What you need to know about modular homes

Let's discuss how these key differences impact the assembly, cost and longevity of a modular home.





A modular home is constructed inside of a factory in parts, so it needs to get transported to its permanent foundation. Once each section of the home has arrived, cranes assemble the parts. After setting to a permanent foundation (also called a permanent chassis), modular homes aren't meant to move. This assembly process goes much faster than a completely site-built home. This is directly opposite of the construction process to 'stick homes' — the term for traditionally built homes, with the assembly of the permanent structure occurring right on the site



On average, modular homes cost $50 to $100 per square foot for the unit only, making them cheaper than other real estate devel.[2] They cost closer to $80 to $160 per square foot when you include fees for full installation. There's a lot of room for savings when compared to the national average for site-built homes, which is $163 per square foot.[3] A conventional mortgage helps finance the cost.


Longevity and durability

Modular constructions are quite resilient and are generally stronger than site-built constructions.[4] They're manufactured in controlled settings and built to endure rough shipping and handling. Construction companies also study the environment of the build site to ensure that the home can withstand elements like strong winds or heavy snowfall . These homes can last generations.

Pros of modular homes

There are many pros to choosing a modular home construction. They are high-quality, customizable constructions that are more efficient and cost-effective than site-built homes.




High-quality construction

Modular homes use the same quality materials as site-built homes like wood, steel and concrete. They are even better engineered for energy efficiency than traditional homes and have better air quality because the materials aren't exposed to moisture during construction. A modular home builder is concerned with quality, as well as longevity.

Quicker completion time

With 60-90% of construction done in a factory-controlled setting, modular homes are completed 30-50% faster than their conventional real estate counterparts.[5] Construction can happen in a matter of weeks, whereas it takes months to build traditional homes.


As a result of streamlined modular construction and the use of bulk building materials, modular homes cost less to build - about 10-35% less than site-built homes - and are an affordable housing alternative.[6]


Another pro of modular homes is that the interiors and exteriors are customizable. In fact, modular construction isn't started until the homeowner decides on the design. Once completed, you wouldn't know it was different from a site-built home. They can also be tailored for accessible living and can include options for an open floor plan, convenient counter heights and spacious bathrooms.[7]

Cons of modular homes

Despite all their benefits, modular homes do come with a few cons, like snowballing costs, dated interior design and the need for land.




Need to buy land

Unless you are purchasing a pre-existing modular home, you will need to buy land. The property also needs to meet zoning requirements and follow HUD code for a home. When calculating expected savings with a modular home to secure a construction loan, factor in the cost of land for an accurate estimate.

Costs can snowball

Once you purchase land, extra costs can balloon from there. Paying professionals to lay foundations and add plumbing, sewage, gas and electrical to your modular construction can get pricey. Extra customization and the size of your modular home also contribute to costs, so it's wise to factor these into your budget as well.

Dated interiors 

Although modern modular homes have more updated interior design now, if you purchase a pre-existing or older modular home, you may receive outdated cosmetic features. You aren't stuck with these forever though! Renovating cosmetic interiors in a modern modular home is similar to a normal home. This is because the structure of the home is still sound.

Eco benefits of modular homes and construction

Modular homes reduce a lot of the environmental impact associated with traditional home construction. They surpass conventional homes in energy efficiency, waste management, emission production, material transportation and are adaptable to their environment.

Modular homes are generally considered green buildings, but not every modular home qualifies as one. Construction companies aren't required to use green designs. Do some research to make sure that the company you choose uses sustainable materials and practices if that is important to you.




1. More energy efficient

Modular home companies generally have their own engineering department that uses computer software to design the home for energy efficiency. Additionally, less energy is expended in the building and transportation processes because the majority of construction occurs in a factory.

2. Less waste

Another big eco-benefit is better waste management during modular construction. Modular homes have carefully engineered designs that use less materials than regular homes. The factory setting also allows for carefully controlled processes regarding material sourcing and waste. Some examples of these processes include less packaging during transport, reusable frameworks and waste materials diverted from landfill to other building uses.


3. Fewer emissions

Compared to conventional construction, modular construction produces significantly less greenhouse gas emissions . More efficient construction practices within a factory and less transportation to and from a build site all contribute to decreased emissions.

4. Sustainable features

If you have done your research and selected a building company with green construction and design practices, you can create the eco-friendly home of your dreams. You can choose sustainable building materials, like bamboo, for the interiors and eco features, like low-flow appliances, for your home.[8]


Modular homes are an efficient and affordable alternative for those looking to build or buy their own home. As permanent, factory-made dwellings, these homes are set apart from mobile/manufactured homes and traditional site-built homes. They are eco-friendly, customizable, cost-effective, high-quality housing constructions and these benefits well outweigh the cons.

If you're worried about not going the conventional home route, don't be. You can still get the same living experience as a site-built home and even a few of the other experiences including financing it with a regular mortgage and covering it with your typical home insurance policy. Take charge of your homeownership journey and choose the type of home that is best for you!

  1. The International Residential Code. ICC

  2. How much does it cost to build a modular home? HomeGuide

  3. How Much Does It Cost to Build a Single-Family Home? Fixr

  4. What is Modular Construction? Modular Building Institute

  5. Modular Myths. Modular Today


  7. Construction Matters: Comparing Environmental Impacts of Building Modular and Conventional Homes in the United States. ResearchGate

  8. Manufactured Housing Survey (MHS) Frequently Asked Questions (FAQs). U.S. Census Bureau

  9. Modular Construction Market. Fortune Business Insights

  10. Modular Construction Market Size, Share & Trends Analysis Report By Product. Grand View Research