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What is a prefab home?

Modular housing development
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Prefab homes — short for “prefabricated” and also known as modular homes — are constructed away from the home site in a factory, then shipped in sections to the customer’s property for assembly. These homes can often go up much faster than traditional stick-built houses, and at a lower cost.

How does a prefab home differ from a modular home?

Prefab and modular homes are related but different kinds of housing. For all intents and purposes, as far as homeowners are concerned, these — as well as terms like “factory-built home” — mean the same thing. In each, there’s some level of construction that takes place offsite, then the sections are trucked to your home site for assembly.

Prefabricated homes, which can be single-family or multi-family, are generally built with a specific customer in mind. They can often be customized to the customer’s specifications, though not to the same extent that a custom-built traditional home might be.

Prefab home costs

Prefab can cost less than a custom-built home. According to HomeAdvisor, the average cost to build a traditional single-family home in 2022 is $283,900. The comparable cost to build a prefab home is $240,000.

While hard costs such as construction labor make up a larger portion of the price tag for custom-built houses, prefab generally costs less because it requires less time for the underlying product to be created, along with less equipment and lower labor costs.

Keep in mind, though, that you might not receive as many customization options with prefab. Prefab homes are designed to fit the needs of the average person — they’re not based entirely on your individual needs. If you want to customize the home in certain ways, you often can, but you’ll pay more.

Pros and cons of prefab homes

Prefab homes can provide some homeowners with peace of mind, knowing that their home was designed by professionals and built with specified quality standards, repeated over a vast number of structures.

Pros

  • They’re often cheaper. A prefab home usually costs less than a traditional one, both to build and to purchase.
  • They’re easier to maintain. Prefab parts can be more easily — and cheaply — replaced than construction details in a conventional home.
  • They’re faster to build and less disruptive to neighbors. Being built in a factory and assembled in place eliminates much of a typical construction site’s noise and mess.

Cons

  • They’re not available everywhere. Transporting prefabricated homes has historically limited them to areas with a high volume of trucking routes.
  • They’re not as easy to customize. Some buyers might prefer the ability to highly personalize their home’s design.
  • They might not be in the condition you expect. Because it’s built offsite, the quality of a prefab home’s construction can be difficult to verify until it’s ready for occupancy.

How to choose a prefab home company

  • First, decide if you want the option to buy a standard home or a fully customizable home. That will guide your choice of prefab company.
  • Search for a company that has experience in your area and homes in place that you can view.
  • Look for a company that offers design services and uses quality building materials and finishes.
  • Carefully consider the warranties the company offers, how long it will take to get your home onsite, how much it will cost and how to finance the build.

Bottom line

A prefab home is typically built just as well or better than a stick-built home. It can go up faster and cost less to build, too. But customization can be limited, and prefabs are not available in all areas of the country and for all types of housing.

Written by
Michele Petry
Senior real estate editor
Michele Petry is a senior editor for Bankrate, leading the site’s real estate content.
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