Federal law drops modular steel-frame rule, trimming build costs

The 21st Century Road to Housing Act removed a requirement that modular homes ride to their sites on permanent steel frames. The Wall Street Journal reported the change could cut more than 10 percent off initial construction costs. Andrew Justus, a Niskanen Center housing researcher, puts the savings at $5,000 to $10,000 per unit.

The law also directs HUD to study a federal building code for modular housing. Manufactured homes already have one, and Sweden and Japan use national standards to build at scale. Factory-built housing remains a rounding error in U.S. supply. The Census Bureau counted more than 100,000 manufactured homes shipped last year. It counted 37,000 modular units completed the prior year. Factory-built homes accounted for just 3 percent of housing completions.

The bill takes aim at a second obstacle: financing. Modular projects need more cash upfront than traditional construction, and banks without experience in the sector can find them risky. Michael Tillman, CEO of PTM Partners, is unimpressed for now. The bill, he says, is "a study and rule-making directive. It's not a policy change. I think it's signal, not substance."

He may be right. One law will not turn modular into a mainstream building method. For operators, the change narrows the cost gap with conventional construction, and the financing language nudges lenders wary of the category. Investors are already placing their own bet: Boxabl went public on Nasdaq under the ticker BXBL after merging with SPAC FG Merger II Corp at a $3.5 billion valuation, and plans to spend the proceeds on production. They are paying for the same cost curve the law is trying to bend.