The modular and panelized construction market, covering everything from homes to prisons, is expanding rapidly, addressing housing shortages and labor gaps in the United States.
As of 2025, there’s a need for an estimated 3.7 to 4.5 million homes to meet the housing demand, and a shortage of skilled workers like carpenters and electricians. Modular construction, which allows up to 80% of work to be completed in a factory, is emerging as a solution, gaining popularity for both residential and commercial projects.
Developers like Greystar Real Estate Partners are embracing modular construction, with its ability to reduce project timelines and mitigate external risks such as weather and labor shortages. Factory-controlled manufacturing speeds up construction, making modular projects 50% faster than traditional methods. Additionally, these factory-built units can meet sustainability goals, reducing waste by 80% compared to conventional construction.
Automation is a key factor, with robots and CNC machines used in factories to streamline processes. For instance, factory-built modules may already have plumbing and electrical infrastructure pre-installed, minimizing on-site work. While modular homes are usually built to a permanent foundation, they differ from manufactured homes, which can be relocated due to their permanent chassis.
However, modular construction faces barriers, such as the stigma that it’s similar to mobile homes and the need for developers to adapt to different workflows. The U.S. Department of Housing and Urban Development (HUD) plays a significant role in regulating factory-built housing, with some advocating for expanded market commitments and standardization to reduce production costs. Additionally, many states are creating their own modular codes to facilitate broader adoption.
Despite these challenges, modular construction’s growing popularity in both residential and commercial sectors signals a significant shift in the building industry.
Reference
Kridel T. (2025) Trends in Modular Construction. EC&M. March 14.