Defining Key Housing Construction Terms

Policymakers at all levels of government are exploring ways to increase housing supply and lower housing costs. One potential means to achieve these goals is to support and encourage the adoption of cost-effective innovations in building materials and home construction processes. Confusion over terminology, however, can hinder public understanding of these innovations and impede advancements. To further complicate matters, many terms are not mutually exclusive. To help provide more clarity on this subject, this blog provides basic definitions.

On-site construction refers to building a home on the lot. The builder has all necessary materials, including concrete, lumber, drywall, and interior finishings like countertops and appliances, delivered to and used on the worksite.

• Benefits: It is the traditional construction process and is familiar to workers, developers, and local land development officials. On-site construction also offers flexibility for making changes due to site conditions as needed.
• Drawbacks: Construction schedules heavily depend upon worker and building material availability and weather conditions, which can complicate construction budgets and production timeframes.

Stick-built describes the longstanding tradition of wood-framing residential housing. Builders primarily use softwood lumber to create the structural supports and skeletons of homes.

• Benefits: Careful stewardship supports healthy forests and provides economic opportunities for rural communities. Timber building products can be a valuable tool in carbon sequestration, in contrast to materials like cement that require high energy inputs to produce. Stick-built on-site construction offers the flexibility to make changes due to site conditions as needed.
• Drawbacks: Using lumber requires carpenters and other skilled workers, and the construction sector is facing a shortage of skilled labor and increasing wages. Meanwhile fluctuating costs for lumber and supply chain issues complicate construction budgets, leading to project planning uncertainties and higher housing prices.

3D-printed homes are built on site using a construction equipment size “printer,” a machine that pours layers of proprietary concrete to form the foundations and walls of homes. In some cases, smaller 3D printers, using other materials such as specialty plastics, can create discrete pieces of the home, such as doorknobs and countertops.

• Benefits: One firm estimated that using 3D printing resulted in a 15% cost reduction, while decreasing the project schedule to three months compared to seven months for a stick-built, on-site home. The process also lessens the number of skilled workers required for building a home.
• Drawbacks: 3D Printing is one of the newest technologies in residential construction. As a result, builders may find it difficult to determine costs and schedules during the development phase. Furthermore, local authorities often lack the knowledge to apply and evaluate 3D printed homes using existing building codes, deterring developers from using the process. Finally, concrete can be expensive and its production results in high carbon emissions, so 3D printing may have higher environmental costs compared to stick-built and other forms of home construction.

A 3D printer pours concrete to ultimately create Habitat for Humanity’s first owner-occupied, 3D-printed home—a 1,200 sq. ft house constructed in only 28 hours in Williamsburg, VA. Source: Consociate Media

Modular housing is often used interchangeably with the term prefabricated and refers to a construction system that produces building segments, such as a roof or individual rooms, in a factory. These component pieces are then shipped and assembled on a foundation at the building lot. Builders also use the term factory-built homes for modular or prefabricated homes. Modular housing can incorporate innovative products such as mass timber or structurally insulated panels. Modular housing and stick-built homes are constructed to the same local and state building codes.

Builders also use the term panelized construction to describe constructing a building out of specialty panels that are flat packed in a factory, delivered, and assembled on the construction site. Some industry experts consider the use of panels as a form of modular construction, or as a time and labor-saving product in stick-building.

• Benefits: Manufacturing in a factory can ensure precision design and production, so that all the pieces of the house tightly fit together—a crucial step in building an energy efficient home. Panelized construction also allows builders to produce homes using fewer skilled workers, reducing labor costs, and in less time than stick-built homes.
• Drawbacks: Because there are very few modular housing factories or orders of insufficient quantity to achieve cost-saving economies of scale, the costs of modular construction can still be higher than stick-built homes. Also, local officials may be less knowledgeable about the product and process, requiring lengthy permitting and inspection procedures and slowing the construction timetable. Finally, modular designs offer limited ability to customize segments to meet developers’ needs or to address unexpected site issues.

Manufactured homes are housing units built in a factory (so may also, at times, be referred to as “factory-built homes”) and adhere to a U.S. Department of Housing and Urban Development (HUD) standard, the National Mobile Home Construction and Safety Standards Act of 1974. Manufactured homes are constructed on a chassis and then delivered intact to a lot. Manufactured homes are also referred to as HUD-Code homes. The term mobile home refers to this type of house built prior to 1976 when the HUD standard went into effect.

• Benefits: Manufactured homes cost significantly less than on-site stick-built homes. As manufactured homes are largely complete upon arrival at the site, minimal labor is necessary, and the installation occurs relatively quickly compared to on-site, stick-built homes. If not affixed to a foundation, manufactured homes can be moved to a different location. HUD regularly updates the national standard to improve safety and energy efficiency.
• Drawbacks: Negative perceptions of manufactured homes have led localities to ban them outright or impose onerous restrictions on their use. Also, access to mortgage financing for the purchase manufactured homes has historically been more difficult than on-site, stick-built homes. Manufactured housing homeowners often cannot access the traditional home mortgage market unless they meet certain criteria, such as having the home fixed to a foundation on the borrowers’ land.

A manufactured home being installed. Source: U.S. Department of Housing and Urban Development

CrossMod Home™ are a combination of manufactured housing, some modular components and on-site construction. They are affixed to a foundation and can mimic traditional housing designs, for example, incorporating features like pitched roofs and garages.

• Benefits: CrossMod production costs are lower than on-site, stick-built construction and meet the HUD manufactured housing standard. The homes are often energy efficient and can fit seamlessly into an existing neighborhood. If affixed to occupant-owned land, homebuyers can access Fannie Mae and Freddie Mac CrossMod financing programs through lending partners.
• Drawbacks: CrossMod homes are more expensive than manufactured housing and, to obtain traditional financing, require the buyer to purchase land. These homes also face land-use restrictions limiting or banning manufactured homes in many areas.

Policymakers and stakeholders need a common understanding of building products and processes to develop a regulatory environment that supports advances in construction, which can ultimately help to increase housing supply and reduce prices.