Center for American Progress

RELEASE: Increasing Affordable Housing Stock Through Modular Building
Press Release

RELEASE: Increasing Affordable Housing Stock Through Modular Building

Washington, D.C. — The United States is facing a severe housing affordability crisis, largely due to a lack of supply. A new report from the Center for American Progress examines how modular building, if brought to scale, has the potential to reduce construction costs and make building new homes more affordable. 

Modular building is a construction technique where the entirety of a building is manufactured off-site at a factory and then transported to a construction site to be assembled. This building technique is among the initiatives supported by the Biden administration to lower construction costs while rapidly increasing the supply of affordable housing. The new CAP report reviews the affordable housing shortage in the United States, the benefits of modular building, and its potential to alleviate the housing crisis, offering recommendations for how to utilize modular construction. Some of these recommendations include: 

  • Expanding financial resources for the modular construction of affordable housing: Federal agencies should expand strategies to make tax-exempt private activity bonds (PABs) more available for modular affordable housing projects, particularly for families developments. At the state and local level, policymakers should explore and adopt funding mechanisms that promote innovations in the construction of affordable, resilient, and energy-efficient housing. 
  • Standardizing building codes and land use to facilitate production and project approvals: States facing similar housing affordability challenges should work together to develop uniform building code rules around modular construction to help manufacturers streamline production.  
  • Supporting a more diverse workforce and higher wages in modular construction jobs: Modular manufacturers receiving government support to construct modular affordable housing should be required to pay prevailing wages and create pathways for a more diverse workforce. 
  • Expanding the capacity of modular building: Congress should authorize grant and tax credit programs to support the expansion of modular housing construction capacity. 

“Modular building offers the opportunity to cut construction costs and make more affordable housing units available quickly,” said Michela Zonta, senior policy analyst for Housing Policy at CAP and author of the report. “Coordinated efforts by government at all levels to bring modular building to scale have the potential to make the housing stock more resilient and sustainable relative to the challenges presented by climate change.”

Read the report: “Increasing Affordable Housing Stock Through Modular Building” by Michela Zonta 

For more information or to speak with an expert, please contact Sarah Nadeau at snadeau@americanprogress.org.

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