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Demand for Prefabricated Apartments Climbs as Costs Balloon for Multifamily Development

Updated: Oct 27, 2022

Construction of prefabricated homes is ramping up and providing an alternative to traditional multifamily, where the construction process has slowed because of rising costs and supply-chain delays.

Construction of prefabricated homes is ramping up and providing an alternative to traditional multifamily, where the construction process has slowed because of rising costs and supply-chain delays.

Prefabricated construction, which includes modular, manufactured and mobile homes, has for years been used in lower-budget housing development. But with rising interest rates and higher prices for materials such as lumber, the process is starting to get more of a toehold in the mainstream apartment market.

While industrialized construction currently accounts for only a fraction of overall housing, the market is seeing steady growth. More than 50,000 manufactured homes, which are built completely off-site, were shipped as of May. That is a 31% increase from the same period in 2020, according to the U.S. Census Bureau. As demand climbs, manufactured housing has also become more expensive. Census data reported that the average sales price of a manufactured home in the U.S. in May 2022 was $124,900, up from $85,900 in May 2020. Modular housing, another type of prefab, might be likened to life-size Lego building, said Andrew Staniforth, chief executive officer of the modular construction startup Assembly OSM.


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