Modular Vs Manufactured Homes

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Many people love the idea of building their dream home, especially given the persistent shortage in housing inventory. But it's an expensive endeavor. The average price of a new-construction house in January 2022 was nearly $500,000, according to the U.S. Census Bureau.

Luckily, there are plenty of options open to you in the new-build world. Instead of constructing a home from scratch, you might consider buying a prefabricated home, along with a piece of land for it to sit on. Prefabricated homes come in two main types: modular and manufactured.

The distinctions between these two types can be subtle. Let's delve into the key differences between modular and manufactured homes, and help you determine which variety is right for you.

Like all prefabs, modular and manufactured types of homes share one key characteristic: They are built in a factory, and then moved to the lot where they’ll reside — as opposed to the old-fashioned way of erecting a residence on-site, from the ground up.

A traditional stick-built home is constructed of customized parts on a designated site: a foundation is dug and a frame goes up; then walls and a roof are built around it, and the interior is fleshed in with more walls, ceilings and floors. In contrast, modular homes’ components are built off-site, often as a number of discrete units (known as modules). They are then shipped to a site that you own or rent, set on a foundation, and hooked up to local utilities — electrical lines, gas lines, sewage pipes, etc.

The fact that their parts are prefab doesn't mean you can't be creative with the design of your home. By connecting together a number of modules, you can customize your home's design almost as much as if you were building it from scratch.

To construct a modular home, you’ll need to rent or own a piece of land that allows this type of house (not every neighborhood does, so check beforehand with the HOA or local zoning authority). While the basic cost of a modular home runs around $40-80 per square foot, the all-in cost (with installation) of a modular home is $100 to $200 per square foot, or $180,000 to $360,000 for an 1,800-square-foot home. In addition, you’ll need to connect the house to utilities, which can cost anywhere between $3,000 and $20,000.

As their name suggests, manufactured homes are made in factories, just like modular homes. They’re built on a steel chassis, like an automobile, and then transported in one piece to a site. However, there is a key difference: While modular homes are permanently attached to a foundation, manufactured homes can be uprooted and moved again.

Because of this, manufactured homes are often associated with temporary housing and trailer homes — in fact, they used to be called "mobile homes." Today, however, many manufactured homes are not meant to be mobile. While they can be towed to a plot of land, they are often then set up on concrete blocks or metal piers.

In fact, a modern manufactured home can have many of the hallmarks of a traditional home build, including lumber framing, fiberglass insulation, PVC plumbing, drywalls and wood flooring. Homeowners can choose between multiple floor plans and select everything from countertops to tile based on their preferences. Some 22 million Americans live in manufactured homes, according to the Manufactured Housing Institute's "2021 Industry Overview."

Manufactured homes are less expensive than traditional homes. According to HomeAdvisor, their total cost is around $100-200 per square foot. In contrast, a traditional new-build home averages $150 per square foot, and can easily go as high as $400.

Some people buy a plot of land for their manufactured home to sit on; others rent a space in a manufactured home park instead.

Their mobility aside, modular and manufactured homes have several key differences.

The key difference between these two types of homes is that modular homes are anchored to the ground, whereas manufactured homes can (technically) be moved. There are also a number of more subtle differences, however.

Perhaps the biggest consideration in choosing between these two types of home will be your budget. Modular homes are generally more expensive than manufactured homes, even without the cost of the land to put them on. For your extra money, however, you’ll get a greater degree of customization, and a house that will depreciate less quickly.

On the other hand, you might be drawn to the mobility of a manufactured home. If you can't afford to buy a plot of land, or simply want the flexibility of renting your home site and being able to move when you’d like to, then a manufactured home could be the best option for you.

Whichever you choose, make sure that the home you want can be put on the site you’ve selected.

SHARE: Matt Ryan WebberArrow Right Troy SegalArrow Right Shorter construction time: Flexible specs Reduced waste: Potentially better construction: Customization limitations: Additional costs: Preconceived prejudices: Affordability Speed: Easy to maintain: Less equity: Financing: Cookie-cutter: Limited locales: SHARE: Matt Ryan WebberArrow Right Troy SegalEdited byTroy SegalArrow RightSenior homeownership editorTroy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value.Troy Segal Troy SegalArrow Right