The U.S. housing industry is suffering a crisis of both supply and labor. From urban cities on the coast to rural towns in the heartland, homebuilders have spent years struggling to meet demand, which has sent housing prices soaring and forced many Americans to delay buying a home. A 2022 report from the nonprofit research group Up for Growth estimated that the country is currently short about 3.8 million units, roughly double the number from 2012.
Prefabricated housing could help ease the shortage. The building method involves constructing housing components in an off-site factory and then delivering them to the housing site where workers assemble the pieces in LEGO-like fashion, all without cranes. Homes built in this way currently account for only 3% of newly built single-family homes in the U.S.
That share could soon grow much larger. As the global prefabricated buildings industry is expected to grow from $106.1 billion in 2020 to $153.7 billion in 2026, the home construction industry may increasingly turn to prefabrication to take advantage of shorter build times, more efficient building methods, and better conditions for workers.
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Leor Kouser, an installation supervisor at the Los Angeles-based prefabricated home company Cover, thinks that shift is inevitable.
“The future of construction will definitely be more automated, more robotic, and more mechanized,” Kouser told Freethink. “It’s just a matter of time.”
The evolution of prefabricated homes
Prefabricated homes may sound futuristic but they aren’t a recent invention. The earliest example in the U.S. dates back to 1624 when a colonial American fisherman commissioned an English construction company to fabricate components of a building and ship them overseas to the fishing village of Cape Anne. Later, in the 19th century, prefabricated homes were used to house the throng of prospectors who came to California during the Gold Rush.
But it was Sears that truly brought prefabricated homes into the American mainstream. From 1908 to 1940, the company sold roughly 70,000 so-called “kit homes” that started at around $160. (The catch: Buyers had to assemble the homes on their own.)
After World War II, as millions of veterans and their families were seeking affordable housing, prefabricated homes saw brief surge in popularity, particularly with models like the enameled-steel Lustron house, which cost $7,000 to $10,000, took two weeks to assemble, and promised to “defy weather, wear, and time.” But ultimately, prefabricated homes never truly caught on in the U.S., despite seeing relatively solid adoption in nations like Sweden and Japan.
Advancing the industry
Prefabricated homes may finally start catching on in the U.S. A 2019 report from the consulting firm McKinsey & Company noted that the industry is experiencing a “new wave of attention and investment” thanks to “maturing digital tools” that are optimizing the building and delivery process. Meanwhile, American consumers seem to be warming up to the idea of prefabricated homes, “particularly as new, more varied material choices improve the visual appeal” of the homes.
Cover is one of a handful of companies aiming to push the prefabricated industry closer to mainstream adoption. As a team of experts in architecture, software, automotive, aerospace, and construction, the company uses software and robotics to build nearly all of its housing components within its Los Angeles facility.
Cover custom designs each house according to the needs of the customer and the site where the house will be built. The process begins with Cover creating a detailed 3D model (“down to the screw”) of each home before construction begins. With the design finalized, the company can start building the components and laying the foundation for the house at the same time.
“Unlike traditional construction, where the unit construction can only start once the foundation and sitework is complete, we do both in parallel, which saves you months of time and noise on your property,” the company notes.
The process also saves money. After all, conventional home construction projects often incur unforeseen overrun costs, usually as the result of miscommunication between different contractors or administrative errors. Because Cover builds all housing components in an off-site facility, there’s far less opportunity for the construction process to run into unforeseen costs.
Cover’s wall-paneling system helps ensure things go smoothly. Each section of wall arrives at the house site already configured for insulation, structure, waterproofing, and electrical, allowing for quick assembly.
The company likens buying one of its prefabricated homes to buying a car: You know exactly what you’re getting and when you’re getting it, and the final design won’t change just because somebody “bought the wrong part at Home Depot.”
Better working conditions for construction workers
The relatively easy assembly also means workers don’t have to train as extensively as conventional construction workers.
“Somebody with zero construction experience can get trained up in a matter of weeks,” Kouser said.
Working on a prefabricated home site also takes a lower toll on physical health.
“Conventional construction, you’re just working hard, man,” Kouser said. “You’re working with your back. Things are heavy. [The] environment is just brutal.”
Poor working conditions are likely a major factor behind the nation’s shortage of construction workers. According to a recent report from the Home Builders Institute, the U.S. currently has between 300,000 and 400,000 unfilled construction jobs.
The report also highlighted a troubling trend: fewer young people have been entering the industry, and, considering the median age of a construction worker is 41, a significant share of the workforce could retire in the not-too-distant future.
Although the prefabrication industry won’t solve the labor shortage problem on its own, offering healthier conditions and a better work-life balance is a positive step toward encouraging a new generation of construction workers to help meet the nation’s growing housing demand.
“[In prefabricated construction] things are more light-duty, so it’s not so much strain on your physical health, which, you know, just allows you to enjoy life more when you do have free time,” Kouser said.
Cover is currently focused on building relatively small (about 1,200 square feet) prefabricated homes in the Los Angeles area. But if Cover and similar companies can successfully scale up, you might soon see bigger and more complex prefabricated homes popping up in neighborhoods near you — all built more quietly and quickly than conventional construction.
“Changing an industry is probably the most difficult thing anyone can take on,” Kouser said. “But technology is starting to recognize that there’s a market [in prefabricated homes] that really hasn’t been tapped into, and there’s just far too much potential to ignore.”
