What is a prefab home? Pros, cons and costs

09 Jun.,2025

 

What is a prefab home? Pros, cons and costs

Types of prefab houses

“Prefab house” is a blanket term that refers to a few different types of prebuilt houses, namely modular and manufactured houses. Let’s dive into the different types of prefab homes you may come across and discuss some of their differences and similarities.

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Modular homes

Modular houses are prefabricated homes that are created piece by piece in a climate-controlled location and then transported to a homeowner’s property, where they’re assembled and built on a permanent foundation.

Because they’re built on a permanent foundation, modular homes are often indistinguishable from standard single-family homes and may be considered single-family homes by lenders. Modular homes are a popular starter home option because they offer a variety of styles and floor plans, and owners can add on modular home additions as their family or needs grow.

Modular homes are built to strict standards, and like traditional stick-built houses, can appreciate in value over time. Because they’re often treated like traditional homes after construction, modular homes tend to be easier to finance than other prefab homes.

Manufactured Houses

Manufactured houses are a type of prefab home you might know as a mobile home. Manufactured homes were known as mobile homes until when the Department of Housing and Urban Development (HUD) issued new regulations for mobile home safety standards and construction codes. Any “mobile home” built after is legally referred to as a manufactured home because it meets the new guidelines.

Manufactured homes are built on a permanent chassis in a factory and transported to a build site. The main differences between manufactured homes and other prefab homes are that manufactured homes don’t rest on a permanent foundation, so they aren’t considered real property. If a manufactured home is put on a permanent foundation and attached to land as real property, that may help expand your financing options. And the other difference is that manufactured homes are built to meet strict HUD standards for safety and construction.

Kit homes

A kit home is a type of prefab house that is purchased as a set of parts and then assembled by the home buyer. Kit homes were famously popularized by the Sears, Roebuck and Co. catalog. From to , customers ordered houses from the models displayed in the catalogs. The kit of parts was typically transported to the customer by rail car.

Kit houses still exist today as mail-order prefab homes and can be purchased from a variety of builders and shipped to your property. Many tiny homes are built from modern home kits.

Panelized homes

Panelized homes are similar to modular homes. They are built in sections at an off-site location or factory and then shipped to a property to be assembled. Modular homes are essentially constructed one room at a time by putting together premade “modules.” Panelized homes come in the form of walls or panels that must be put up like a stick-built home.

Some panelized homes have doors and windows already installed, while others may require additional parts to be added on-site. Like modular homes, once fully constructed, these homes are often indistinguishable from traditional stick-built homes.

Structural insulated panel homes

Structural insulated panel homes, or SIP homes, are similar to panelized homes – but with one key difference. SIP home panels are purchased and shipped to buyers just like panelized homes, except in this case, the panels are made of two oriented strand boards (OSBs) with a thick layer of insulating foam between them.

The panels provide an alternative to typical wood framing that is faster to install and more energy efficient. SIPs can be customized by builders to fit almost any home design, including a hobbit house. They are a great option for anyone who wants a more sustainable and energy-efficient prefab home.

What are the pros and cons of prefab homes?

Here are some benefits and potential drawbacks to help you understand what you’re getting into with a prefab home.

Pros

  • Affordable and sustainable: Most prefab homes are more affordable and sustainable than traditional stick-built homes because they’re manufactured and built using a set number of premade parts or sections, eliminating material waste.
  • Energy efficient: Prefab homes are usually built to be more energy efficient and weather resistant.
  • Fast construction: Prefab homes are generally built faster than traditional stick-built houses. You can move in within months rather than a year or more.
  • Customization: Many modern prefab homes can be styled and customized similarly to a stick-built home. Many manufacturers allow you to choose appliances, wall finishes, baseboard styles and more.

 Cons

  • Financing limitations: It can be challenging to secure financing for prefab home construction, especially if the home is built on a chassis rather than a permanent foundation. If your home is installed on a permanent foundation later on, that can help broaden your financing options.
  • Land costs: When building a prefab home, you need to own the land it sits on, which is an additional cost to the cost of building the house.
  • Location and utility regulations: Depending on zoning laws in your area, it may be challenging to find a lot where you can build a prefab home and hook it up to utilities, like water and electricity.
  • More upfront costs: During the home buying process with a traditional house, you make an upfront down payment and then pay off the rest of the house over time. With prefab homes, you pay upfront for the land purchase, the prefab home and labor and construction. While you may be able to take advantage of financing options, the high upfront costs can deter some.

Are prefab homes cheaper than standard houses?

Prefab homes tend to be one of the cheapest ways to build a house. On average, they’re about 10% – 20% cheaper than traditional homes. And because sections of the home arrive at the build site already constructed, on-site construction time gets cut down.

While it is typically less expensive to construct a prefab home than a traditional house, you should keep in mind that the cost to build doesn’t include other expenses, such as the cost of the land the home is on, the cost of hooking up utilities, etc.

Prefab home financing

It’s important to note that not all mortgage lenders offer financing for all types of prefab houses. Possible financing options for prefab homes are construction loans or a chattel loan, which is a special financing option for personal property.

Your loan options will depend heavily on the type of prefab home you want to buy. Rocket Mortgage® finances modular homes built on permanent foundations. Manufactured homes are also available for financing if they meet the following requirements:

  • Built on or after June 15, , and has a HUD tag
  • Permanently affixed to land
  • Titled as real property with land

FHA loans for manufactured homes require a foundation inspection to ensure there are no foundation issues. The inspection must meet the standards set in the Permanent Foundations Guide for Manufactured Housing. You can also use a previous home inspection to qualify for an FHA loan.

Prefabricated and modular homes: Buying Guide, Pros and Cons

Prefabricated house

The subject of prefabricated architecture and in particular, prefabricated houses, are constantly being updated, designed and incorporating new capabilities in the face of technological innovations.

The development of new materials, modern techniques and the audacity of more than one construction designer has led to the development of modular housing construction in industrialized format, mainly represented in modern prefabricated or modular homes that some technicians identify as advanced construction technology for perfect homes.

But… Why buy a prefabricated home? The most timely answer is in the following image

Prefabricated houses respond to the need for: lower or competitive prices, better finishes and design, construction quality, reduced execution times, high energy saving buildings, and, above all, to reduce the environmental impact.

So, the modern prefabricated house can be the right choice in many cases.

What is a prefabricated house

Prefabricated houses are dwellings built by standardized parts that have been built in a place different from its final location on plot. In short,“industrialized houses“.

Objectives! Modern housing requires skills and quick and effective solutions to meet certain customer needs with high performance and satisfactory results in less time, at a more affordable price and on a model of housing already tested in a rigorous and ideal process.

Modular constructions offer possibilities both in terms of rigorous manufacturing and on-site execution if they are carried out consistently in practice.

The real estate market when it comes to selling has a growing affinity towards prefabricated and energy efficient green homes in their modular designs that actually provide us with a modular type housing cheap compared to traditional construction.

We must remember that the market does not only offer the typical modular wooden house, we already find a long catalog of materials (aluminum – steel, all types of panels, concrete, polycarbonate, pvc, steel … etc) that thanks to technologies increasingly offer us more possibilities in resistance and qualities both in the walls, as in cover and the interiors of the same.

Modular housing concept

As we have already mentioned, a modern prefabricated house is one that is “built under a factory roof”, with modern construction machinery that in many cases works to the millimeter.

Prefabricated housing should not be confused with modular housing. A modular house is one whose initial design is made up of individual elements; bedroom, bathroom, kitchen, etc., which, as a whole, form a habitable dwelling.

Leaving us from the typical standard of gabled housing, as examples of modular design we can identify the composition:

Undoubtedly, the “game” can generate a great variety of prefabricated modular house plans , although the reality is that simplicity is the cheapest way to buy a prefabricated property.

The production line of a house once finished, is what we can call “the container”, the housing module is transported in vehicles to the chosen site where the parts – containers will be assembled (Normally, on a sill – base or foundation already made of reinforced concrete) and thus the construction is completed in a short period of time.

We must remember that the modular home is not a mobile home, it is simply a home built off-site and that is why it differs mainly from the traditional man-made home.

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Normally the modern prefabricated house has multiple assemblies that make up the different rooms to inhabit. This system provides us with different advantages that we must analyze…

Advantages of prefabricated houses

1.- Control conditions

More control over the weather, quality control, improved supervision of the work, easier access to tools, and fewer deliveries of materials in time leads to lower cost and architectural quality of construction. These are tangible advantages that are difficult to manage on site.

2.- Environmental impacts

Cost reductions and less waste of materials, less water, dust and noise pollution, and less waste of energy in general, although prefabrication has an additional cost that must be quantified regarding transportation to the location.

3.- More compressed times

Changes can be made in the construction sequence, saving time and improving workflow, resulting in cost reduction.

4.- Less conflicts

When the house is assembled in the factory. There is a reduction of labor conflicts with the construction workers and a more programmed work.

5.- Improvement of materials

From the quality of the materials, both in staging and control, to reduction of storage space and a lower number of losses or misplacements.

6.- Security

Increased worker safety through reduced exposure to inclement weather, temperature extremes, and ongoing or hazardous operations; improved working conditions.

Disadvantages of prefabricated houses

  • One of the most prominent drawbacks is the need to adopt to a pre-established design. We cannot always acquire the home of our dreams.
  • Problems in the location of the property. It is necessary a series of circumstances to be able to transport in a suitable way the modules that conform the housing without considering the disbursement attending to the transport of the same ones that can increase in an important way the acquisition of the good.
  • Given that the legislation does not adequately regulate this type of property there may be problems in the building permits or in the certificates of habitability since in many cases the prefabricated houses are acquired outside the Spanish territory, built according to other regulations and legislation. (Interesting to see the article of the expert report on building and the expert architect to understand a little more).
  • Maintenance. Depending on the materials used in the project, it is necessary a rigorous maintenance of its different rooms.
  • It is necessary to acquire a location, so the cost of the house should be added to the cost of the land.
  • Depending on the climatological characteristics of the location, a prefabricated housing typology will be acquired. Building in the Mediterranean is not the same as building in Finland.
  • The space of prefabricated ecological houses. The dimensions of prefabricated housesare usually smaller, standardized and pre-designed. When it is intended to acquire larger elements, the cost usually skyrockets due to the necessary adaptations to the customer’s requirements.

In this sense, both advantages and disadvantages of modular housing we already talked about in the article Container houses where we also inquired about the cost of the container and the different characteristics of the same as well as the construction methodology with a video example.

Prefabricated housing prices

We have made a small market study to see the prices of prefabricated houses for sale (We have not added the wooden houses that can be placed in a garden) We have only considered the prefabricated houses of concrete, metal or wood that contain a consistent and minimum conditions for living: (Prices shown excluding VAT)

Prefabricated housing models Surface area Rooms – Bathrooms Main material Total price prefabricated house Average m2 built House 1 90 m2 Built 3 Bedrooms – 2 Bathrooms Concrete Euros Euros/m2c House 2 220 m2 Built 5 Bedrooms – 3 Bathrooms Concrete Euros Euros/m2c Dwelling 3 87 m2 Built 2 Bedrooms – 2 Bathrooms Wood Euros 431 Euros/m2c House 4 269 m2 Built 3 Bedrooms – 3 Bathrooms Wood Euros 350 Euros/m2c House 5 36 m2 Built 1 Bedrooms – 1 Bathrooms Metallic Euros 764 Euros/m2c Dwelling 6 100 m2 Built 3 Bedrooms – 1 Bathrooms Metallic Euros 875 Euros/m2c House 7 300 m2 Built 5 Bedrooms – 3 Bathrooms Metallic – Concrete Euros Euros/m2c Dwelling 7 102 m2 Built 2 Bedrooms – 1 Bathrooms Concrete Euros Euros/m2c Dwelling 8 82 m2 Built 2 Bedrooms – 2 Bathrooms Concrete Euros Euros/m2c House 9 203 m2 Built 4 Bedrooms – 3 Bathrooms Concrete Euros Euros/m2c

Things you should know about the price:

  • There is a significant disparity between the offer that is marketed between different companies, even if we are talking about homes with the same construction material.
  • The larger the property, the lower the price per square meter built.
  • The prices indicated are always “from”. So we must be especially careful in the budgets that we acquire. Ask for very detailed budgets and if possible, with “turnkey”.
  • The materials in which the house is built are usually prefabricated; wood, with metal containers or concrete. Wooden houses are the cheapest and concrete houses are the most expensive.
  • Many times the price that is offered does not include; transport, assembly of the house, geotechnical study, project or few indications of the interior finishes, to give some examples.
  • The transport is around to € (a house measures 90 square meters) and the assembly of the house, although it depends on the meters, is around 70 – 100 Euros per square meter built.

In our case we asked a colleague who is dedicated to the construction of prefabricated houses who told us approximate price per square meter of a finished house with everything included; with normal standards are between and € square meter built.

Always ask for detailed budgets and that indicate real cases of prefabricated houses already built.

From here on, ask in several companies and always ask for a detailed budget of the construction of the prefabricated house so that you can compare. By the way! Also ask for references of real houses already built.

Efficient design of a prefabricated house and dwelling

It should be noted that the types of prefabricated houses that we can find in the market have had an exhaustive study on their energy and bioclimatic behavior. This is an advantage that makes it possible to save a significant amount of energy. Based on the “container” standard, we can identify their behavior in the following image:

Lots of efficiency and more, but…. are they really comfortable? Well, as an example I add the following video that seems to me to explain very well the essence of housing in a prefabricated house, besides being a real case:

In this sense, bioclimatism in design is recommended to see:

  • House facade design (Bioclimatic design strategies).
  • Architecture and form (How wind and sun affect)
  • Introduction to sunlighting (Case study plus online tools)

Highly sustainable prefabricated house project

In this case we have to go to Australia to the company Archiblox committed to sculpting modular ecological houses that generate more energy than they consume, awarded with different prizes.

In Spain, there is hardly any industry of prefabricated ecological housing , moreover, people usually have a very vague generalized idea of this“modern architecture“, associating it rather to temporary and low quality constructions. Against this backdrop, it has a lot of merit that a Spanish company NOEM focused on a business of sustainable prefabricated houses with zero carbon footprint, obtains the European Entrepreneurship Award.

The example of modern prefabricated house

The shapes, the new technology and the different compositions of the plans in modular homes are shaping a modular aesthetic of great value and in some cases, even risky in its design. Modern prefabricated housing is here and this is an example of strong innovation. Invisible housing…

This wonderful house is built by DMAA. We must remember that the architectural modulation also goes into all types of construction; from buildings, industrial buildings or coworking offices to give some more examples.

How to build a prefabricated house

In this section, what we want is to carry manuals or PDF guides on how to build a prefabricated house step by step and have a perspective and intuit the works, plans, measurements and needs, tools, materials, concrete, wood … etc. .

The documentation represents the steps that we will need in the construction of the modules of the house as well as generic reports of the needs and objectives of modular architecture.

It must be taken into account that, the more parts of the dwelling are executed in factory, in a modular house, we will have a higher quality in the design both in the exterior – interior and in the air conditioning installations, doors, walls, finishes and qualities of materials, in the joints that form the envelope … etc…

The following video represents a building practically completed in the factory. An example of housing construction in 4 days:

Now it touches one completed on the ground, bearing in mind that the level of prefabrication can vary, from pieces of walls to complete parametersand likewise on the floor or roof. An example of housing construction in 7 days:

The manuals and guides we recommend are:

  • The concept and history of modular homes. Modular housing construction and architecture HERE
  • The current state of modular and lightweight housing as seen from an environmental point of view HERE
  • Thesis – Prefabricated construction systems applicable to the construction of buildings HERE
  • Modular buildings. A fast, versatile and reliable answer HERE
  • Prefabricated construction design guide HERE (Excellent and extensive manual)
  • Everything we need to know about wood in architecture and housing construction HERE
  • Prefabrication and modulation in architecture from its economics HERE. (Very good economic report – English)

A problem that exists in terms of existing information and resources on the web is that prefabricated construction is undoubtedly derived from wood.

In this sense, since the article Architecture with wood already exposed more than 50 practical manuals and reports that expand the information in this regard, although, as a complement we provide some documents that we find of interest.