What’s next for prefab housing? The ROAD to Housing Act and the future of factory-built homes

The ROAD to Housing Act: A Potential Game Changer

A Breakthrough Amidst Washington Gridlock

In a year marked by gridlock and turmoil in Washington, one bill represents a potentially huge step forward for housing innovation. Introduced by Senator Tim Scott (R-SC), the ROAD to Housing Act proposes a deceptively simple reform: eliminating the federal requirement that all HUD Code manufactured homes include a permanent steel chassis.

At first glance, this might seem like a small technical fix. But in practice, it could reshape the landscape for factory-built housing in America.

Manufactured vs. Modular: Why the Chassis Matters

Key Differences Between Manufactured and Modular Homes

To understand the impact of the ROAD Act, we need to look backwards. While manufactured and modular homes are both forms of prefabricated or factory-built housing, in the US, the two terms have distinct definitions and regulatory pathways:

• Manufactured homes are built to a federal code overseen by HUD (not-so-creatively labeled the “HUD Code” in industry parlance) which preempts all state and local building codes. They’re built on a permanent steel trailer frame and are technically classified as personal property (like a car) unless they’re permanently affixed to land and titled as real property (i.e., real estate).

• Modular homes, on the other hand, are built to the same local codes as site-built homes and are inspected by state or local authorities. With the exception of tiny homes - which are usually built on a trailer chassis (but are not HUD Code compliant) - and other fringe applications, modular homes are placed on permanent foundations and financed with traditional mortgages.

The Impact of the Dual System

This dual system has profound consequences. Manufactured housing remains the largest source of unsubsidized affordable housing in the country, with more than 8.4 million units nationwide. The HUD Code has enabled this scale by standardizing quality, streamlining inspections, and preempting local building codes, which reduces regulatory hurdles and speeds up production across states. It also ensures rigorous safety and energy standards, as modern manufactured homes are a far cry from the “mobile homes” built before the Code’s 1974 ratification. According to the Harvard Joint Center for Housing Studies, manufactured homes cost 27% to 65% less than site-built homes, excluding land—thanks in part to these regulatory efficiencies and the benefits of factory construction.

However, the Code’s design restrictions—most notably the requirement for a permanent steel chassis—have severely limited the versatility of manufactured housing. The chassis requirement, which is rooted in now-irrelevant 1970s-era transportation safety concerns, makes it difficult to build two-story homes or small multifamily structures, constraining the ability of HUD-code homes to adapt to higher-density or infill contexts. (HUD’s recent rule change allowing up to four units per structure is promising, but its real-world impact remains to be seen.) Meanwhile, modular homes, which are also built in factories but to local codes and without a permanent chassis, have long offered more design freedom—but they remain far less common than manufactured homes. And while modular housing is often assumed to be a middle ground between site-built and manufactured options, studies suggest it tends to be more expensive than manufactured housing, even when controlling for size and design.

What the ROAD Act Could Change

By creating a voluntary state-by-state process to allow off-chassis manufactured homes, the ROAD Act would do three things:

1. Reduce costs by $5,000 to $10,000 per home, as the steel chassis could be reused rather than permanently embedded in each home

2. Allow for the creation of multi-story HUD Code homes, larger floor plans, and architectural styles more aligned with traditional site-built housing

3. Enhance consumer acceptance of factory-built housing by allowing more seamless integration into existing single-family neighborhoods

   
   

While ROAD is focused on HUD Code manufactured homes, the Act would be a critical step towards blurring the rigid divide between manufactured and modular housing. As noted in a recent article from the co-founders of Liv-Connected, a modular builder and former Ivory Prize nominee, modular builders face a disjointed regulatory system: “The typical homebuilding process requires a bevy of professionals to assist in navigating the process… Modular houses are no different in that the same applicable local codes must be identified before construction can begin.” By eliminating the steel chassis requirement from the HUD Code, the bill would help the factory-built housing industry overcome one of the last major structural barriers to innovation.

The Takeaway: A Small Fix, A Big Shift

For decades, US housing policy has unintentionally stifled innovation in the name of safety and standardization. The ROAD to Housing Act is a chance to correct that - modernizing a federal code that helped create the manufactured housing industry but now holds it back.

Equally importantly, it’s an opportunity to bring modular builders into the fold, creating a more unified and scalable factory-built housing ecosystem at a time when the nation desperately needs new affordable homes.