America has a housing crisis. The U.S. needs at least 4 million additional dwelling units to ease the crunch, but the rate of new construction is lagging far behind the pace necessary to address the shortage.
New single family home construction peaked in 2006 at an annual rate of 1.8 million units, then fell off a cliff during the financial crisis and never fully recovered. Just 1 million new units were started in 2024, still 40% below the previous high even as the population has increased 13%.
The result is that families of modest means are priced out of the market due to surging values, the inevitable result of supply constraints. Legislators could have an immediate and material impact by removing one artificial legal barrier to affordable, factory built manufactured housing. The simple but powerful action involves deleting five words from current law: “built on a permanent chassis.”
Manufactured housing, once referred to as mobile homes, experienced a mini boom in the 1960s and early ’70s. Shipments surged from around 100,000 units in 1960 to 575,000 homes in 1972, comprising 1/3 of all new single family homes and over half in 14 U.S. states. Standardization and economies of scale in factories drove costs down, as the average price per square foot of a manufactured home fell by 67% over that same period.
It appeared that factory-built housing was on a sustainable growth path as a cost-effective option for many families. A U.S. Department of Commerce Department report in 1973 forecast annual unit sales of 800,000 by 1980. Instead, output plummeted, falling to just over 100,000 last year. What went wrong?