Just 17% of the Country Allows Manufactured Homes—and These Cities Could Benefit the Most From Easing Restrictions

The federal government has its eye on supercharging manufactured housing, aiming to encourage new innovations that bring down the cost of living.

And yet, only a fraction of the country could actually see the benefit under current rules. Just 17% of the nation is zoned to explicitly allow manufactured housing communities, according to the latest Realtor.com® report on the sector.

If this zoning hurdle were put aside, some cities could see major benefits from allowing more manufactured housing, Realtor.com found. Manufactured housing is booming in some cities, and the federal government has pushed changes to make it easier to build and finance manufactured homes.

Last week, President Donald Trump signed an executive order to create a task force that accelerates manufactured housing development. Congress also codified changes to the sector in its 21st Century Road to Housing Act this year.

Realtor.com senior economist Joel Berner says that even with these changes, municipalities get the final say in where homes can be built.

"The federal government can build on the innovations of the Road Act, bringing clarity to what can be accomplished by the removal of the chassis requirement and the design flexibility that opens up," Berner says.

The big hurdles

Industry leaders lauded the Road to Housing Act because it removed the requirement that manufactured homes be built on a permanent chassis. Since most manufactured homes never leave their first destination, that saved about $10,000 in construction costs.

It also allows homes to be designed in new ways, such as those on display at HUD's housing showcase this year. Innovators there are using the flexibility to build homes that could be delivered on a flatbed truck or 3D printed in hours.

Because manufactured housing can be built quickly, it's a method to create new starter homes, affordable to younger people who are first-time buyers. As starter homes make up a smaller share of homes for sale than they did before the COVID-19 pandemic, the industry has seen those costs rise significantly.

With actions from Congress, HUD, and the White House, the coordination is encouraging, Berner says.

"The most helpful component of the order is probably getting HUD and FHFA at the same table to coordinate developments in manufactured housing," Berner says.

"HUD controls the product, while FHFA controls much of the financing, and it will be necessary for both components to develop in sync to make major headway for manufactured housing rather than the two agencies getting in each others' way," he explains.

However, he also adds that public perception of the product is important, and that's another hurdle to overcome. Without the chassis, some of the newest manufactured homes look a lot more like conventional homes.

"The hope is that the 'trailer home' stigma erodes over time as high-quality, attractive manufactured homes become more common," Berner says.

Where could changes make the most impact?

To see where the newly enabled manufactured housing could make the most difference, Realtor.com created a ranking system. It ranked the top 100 housing markets based on their share of starter homes, median land price per acre, and premium for new construction. This way, the list shows where there aren't enough starter homes and where building more is difficult.

The winner was Hartford, CT, which has a premium on land and new construction. Denver; Allentown, PA; Albuquerque, NM; and Colorado Springs, CO, round out the top five.

A majority of the metros that need the most help with starter homes are in New England, and on the smaller side. In most cases, that's because the premium on building new homes there is high. Meanwhile a number of cities also have restrictions that bar manufactured homes.

Some signs point to appetite for change. Virginia Gov. Abigail Spanberger legalized manufactured housing statewide in areas that allow traditionally built single-family homes.

In New York—home to three of the Realtor.com top 10 cities—Gov. Kathy Hochul announced last week the state was investing $20 million to develop factory housing in several parts of the state.

Hochul said that "harnessing the benefits of factory-built technology" could bring "modern, affordable single-family homes to the market more quickly and in more regions than ever before.”