What Is a Modular Home?: Pros, Cons, and Whether Should You Buy One

Elisa Greenberg
Written by Elisa Greenberg
Updated September 13, 2022
Modern house with linear design surrounded by trees
Photo: bmak / Adobe Stock


  • Custom modular homes offer plenty of design options

  • Modular homes tend to save you money and time over stick-built homes

  • You’ll need to find land that allows for prefab homes

  • The cost of a modular home averages $100–$200 per square foot

Get quotes from up to 3 pros!
Enter a zip below and get matched to top-rated pros near you.

The contemporary modular home offers a versatile option for new home construction—you can choose from pre-designed plans or add in features and unique layouts, such as a small modular home with a front porch or a large custom home with an expansive deck. Modular homes are also usually faster and less expensive to build than stick-built homes. Read on for more details about custom modular home design and building possibilities.

What Is a Modular Home?

Simply put, a modular home is a factory-built home—first assembled indoors (in a quality-controlled warehouse) in sections, then transported to your land, where a builder assembles the home on a foundation. Much like new-construction homes, modular homes must comply with the International Residential Code (IRC) for your municipality’s state and local building regulations. Here are a few components of modular homes:

  • They sit on poured foundation sites.

  • Also known as prefab homes, modular homes differ from manufactured homes and mobile homes, both of which do not have foundations.

  • Once fully assembled on-site, modular homes are outfitted with utilities, plumbing, appliances, and ductwork.

  • Built with high structural standards.

  • Same financing options as site-built homes.

  • Same renovation process as site-built homes.

Custom site-built homes, also known as traditional residential construction or a stick-build, are built on your property instead of an indoor factory. Stick-built and modular homes appraise similarly, are taxed the same way, and appreciate over time.

10 types of modular home customization options, including open floor plan, fireplace, and covered porch

What Options Do You Have With a Modular Home?

Like most new builds, you can choose every detail, including your square footage, floor plan, architectural features, finishes, and more. You can select from pre-designed models or highly customized options, whether it’s a 1,500-square-foot pre-designed home with two bedrooms or a 3,000-square-foot home with five bedrooms, custom cabinets, and skylights.

When building a modular home, talk with at least three modular home builders to find one that offers what you want in your price range.

Pros of Modular Homes

Crane moving modular house wall
Photo: brizmaker / iStock / Getty Images

Quicker Build Time 

Because modular homes are built indoors in climate-controlled warehouses, you’ll never have to factor in weather delays. Large building fabrications typically take weeks for modular homes rather than months for on-site construction.

Costs Less Than a Stick-Built Home

Modular homes are more cost-effective than on-site homes because their construction process is more streamlined. Consider that a traditionally-built home incurs delays for weather, manufacturing, shipping, supply chain, and contractors. When you go with a modular home, all the components are ready to build—making the construction process quicker and smoother.

Produces Less Material Waste

The pre-fabrication process produces less construction waste because builders construct everything to scale. Also, because of climate-controlled warehouse storage, you don’t need to worry about damage, vandalization, or unused supplies. Essentially, everything is kept neat and tight during a modular home build.

Unlimited Design and Finish Options

One of the misconceptions of modular homes is limited design. Actually, the design possibilities are endless—and you can fully customize your modular home. Many modular design companies employ architects that can create 3-d renderings of designs to optimize your lifestyle.

Energy-Efficient Features

Modular home companies pride themselves on using high-quality, energy-efficient building materials. According to Modular Homes, the average modular homeowner saves 15% more in energy costs than conventional homeowners. 

One reason for energy savings is utility installation, which takes place post-construction. This installation leads to fewer errors and more ways to choose energy-efficient products, such as:

  • Solar panels, energy-saving batteries, and LED bulbs.

  • Choosing to live off-grid or only have limited utility hookups. 

  • Rainwater collection.

Second, builders seal modular homes tightly, which makes it harder for heat and cool air to escape—creating higher energy efficiency within your home.

Finally, many modular home companies are LEED Certified, which promotes sustainability and builds homes to protect local biodiversity and ecosystems.

Built to Strict National Building Codes

As stated above, modular homes must conform to strict IRC building codes. The IRC codes follow state and local building ordinances to ensure proper construction safety and quality.

In addition, modular homes use stronger construction methods than stick-built homes. Modular homes require transporting, so the construction of sections (or modules) must withstand harsh transportation conditions.

Drawbacks of Prefab Homes

Zoning Ordinances

Modular homes have an off-site assembly process, which could make them ineligible in certain municipalities—especially if a local zoning board requires frequent check-ins during the building process. Before you choose a plot of land for your modular home, you’ll need to check local zoning ordinances or any homeowner’s association guidelines that may prevent the building of prefab homes.

Selling Challenges

Because of the stigma associated with modular homes (many people incorrectly associate modular homes with mobile homes), you may have trouble selling your home in the future.

You’ll want to find an experienced realtor who knows the modular homes’ ins and outs so that you can sell your home without worry. 

Cost Considerations

The initial price tag may seem like big savings, but you can’t forget the costly details that make a house a home. When budgeting for your modular home, you’ll need to set aside money for your home’s foundation, electrical, ductwork, plumbing, fixtures, and cosmetic upgrades.

How Much Does a Modular Home Cost to Build? 

On average, building a modular home costs $100 to $200 per square foot plus the cost of land and fees such as building permits. For a 1,800-square-foot modular home, the cost is typically between $180,000 and $360,000, or $270,000 on average.

The total cost of building your new modular home depends on its square footage, size, design, and property.

Are Modular Homes Worth It?

Many homeowners seek high-quality, cost-effective homes, making modular homes worth it. Yet, there are always drawbacks. Decide for yourself by reviewing our list of pros and cons:


  • Eliminates the need to source architects, engineers, and various contractors.

  • Cost-effective

  • Energy-efficient

  • Choose where you want to live.

  • Made to your specifications and lifestyle.

  • Built in weeks instead of months.

  • Built with sustainability in mind—enhancing personal health and local communities.


  • Stigma

  • Zoning regulations

  • Often mistaken for mobile homes.

  • Quality varies company by company, so you’ll need to do your research.

  • Still need hookups for utilities, appliances, plumbing, ductwork, and electrical.

  • May hurt resale value.

Need professional help with your project?
Get quotes from top-rated pros.