Written by: Internal Analysis & Opinion Writers
Manufactured housing could be headed for significant growth as recent changes to federal housing regulations open new opportunities for factory-built homes. Federal housing officials believe the reforms could help lower construction costs, expand housing supply, and make homeownership more accessible to Americans struggling with elevated home prices and mortgage rates.
Matt Jones, deputy assistant secretary for single-family housing at the U.S. Department of Housing and Urban Development and President Donald Trump's nominee to lead the Federal Housing Administration, said the recently enacted 21st Century Road to Housing Act could substantially change how manufactured homes are built and regulated.
One of the legislation's most important provisions removes the longstanding federal requirement that manufactured homes include a permanent steel chassis. The change could allow manufacturers to develop more flexible housing designs while potentially expanding the types of factory-built homes eligible for construction under HUD's federal manufactured housing standards.
Speaking at the Mortgage Bankers Association's annual conference in Chicago, Jones predicted that the reforms could produce a "significant acceleration of factory-built, non-site-built housing."
The removal of the chassis requirement could also narrow the distinction between manufactured and modular homes. Traditionally, manufactured homes have been constructed according to federal HUD standards, while modular homes generally must comply with applicable state and local building codes. The updated legislation could allow certain factory-built housing designs to qualify under the federal manufactured housing framework, potentially reducing regulatory obstacles.
Jones explained that federal code preemption could encourage changes to state-level requirements, allowing more builders to benefit from standardized construction rules rather than navigating different building codes across multiple jurisdictions.
The changes come as housing affordability remains a major concern nationwide. Factory-built homes can often be constructed more efficiently than traditional site-built properties because much of the work takes place in controlled manufacturing environments. This approach can reduce construction time, improve material efficiency, and potentially lower overall development expenses.
However, manufactured housing has historically faced obstacles involving zoning restrictions, financing requirements, consumer perceptions, and differences in state property classifications. Federal officials believe regulatory modernization could help address some of those challenges.
Jones emphasized that modern manufactured homes have evolved considerably from the mobile homes many consumers traditionally associate with the industry.
"I think for most people, they wouldn't even be able to tell the difference between a site-built home and factory-built home," Jones said, describing the improvements in contemporary factory-built construction.
HUD has also taken separate steps to modernize manufactured housing standards. Previous regulatory changes eliminated the permanent chassis requirement for upper levels of multistory manufactured homes, allowing factory-built sections to be transported and assembled vertically at the property site.
The newer construction approach was demonstrated during HUD's Innovative Housing Showcase on the National Mall, highlighting how factory-built housing could accommodate designs that more closely resemble traditional residential construction.
Jones acknowledged that manufacturers will need time to adjust production facilities and construction methods before consumers begin seeing the full impact of the changes.
"It won't happen overnight," Jones said, noting that factory retooling will be necessary.
The administration is also pursuing additional manufactured housing reforms. HUD recently introduced an action plan intended to accelerate production by updating construction standards, reviewing energy efficiency requirements, and addressing regulatory barriers that may limit development.
Financing represents another important part of the industry's future.
Ginnie Mae President Joseph M. Gormley said investors in the secondary mortgage market are showing growing interest in loans secured by manufactured homes. According to Gormley, certain manufactured housing loans may attract favorable investor demand because of their longer expected duration.
Ginnie Mae is also planning to introduce a modular housing category within its mortgage-backed securities disclosures, allowing investors to better identify loans associated with that construction type.
"There's a lot of interest from investors about that," Gormley said.
Mortgage Bankers Association research also suggests manufactured housing is becoming a more important part of residential lending. According to MBA Deputy Chief Economist Joel Kan, manufactured homes have represented more than 3.5% of total mortgage originations during each of the past three years, a level not previously observed in the association's records dating back to 2008.
Kan believes manufactured housing could help address the continuing shortage of affordable homes, particularly as improvements in construction quality make factory-built properties more appealing to buyers.
"There is an opportunity for manufactured homes," Kan said, pointing to the sector's potential to replenish affordable housing inventory.
Challenges nevertheless remain. State laws continue to distinguish between homes classified as real estate and those treated as personal property, which can affect whether buyers qualify for traditional mortgage financing or must obtain personal property loans.
Ultimately, the federal reforms could represent an important turning point for manufactured housing. By removing outdated construction restrictions, encouraging investment, and expanding design flexibility, policymakers hope to make factory-built homes a larger part of the nation's housing supply. Although implementation will take time, industry officials believe the changes could create meaningful opportunities for builders, lenders, and prospective homeowners seeking more affordable housing options.
