Factory-built construction is moving into the mainstream as rising housing costs and near-record homelessness push governments and non-profits to build faster.
Modular construction moves much of a building’s production into a factory. Modules are manufactured off-site and assembled at the building site, a method Canada’s national standards body calls volumetric modular construction. The idea is decades old, but what gives it fresh urgency is the market it now serves, with home prices near record highs and an unhoused population that remains close to its peak.
On a single night in January 2025, 745,652 people were experiencing homelessness in the United States, and 266,320 of them were living unsheltered, according to the U.S. Department of Housing and Urban Development (HUD). Harvard’s Joint Center for Housing Studies (JCHS) points out that the count was up 165,190 people from January 2020 and that the pandemic accelerated a longer-term climb as rents rose by double digits. Chronic homelessness has nearly doubled since 2016 to almost 170,000 people, which JCHS says reflects the ongoing shortage of affordable homes and insufficient support for people with disabilities.
The cost figures show how that pressure builds. Median new and existing home prices both sit above $400,000. The monthly payment on a median-priced home reached about $3,100 in late 2025, up from $1,700 in early 2020, and a household now needs an income above $120,000 to carry it, compared with $66,000 in 2020. Renters at the bottom of the market have it worse. Over the last decade the number of rental units priced below $1,000 a month has fallen by 7 million, lost outright or converted to higher rents, and 11 million extremely low-income renters compete for 3.8 million affordable and available units. The 13 million renter households earning less than $30,000 a year have a median of just $210 a month left for everything else once housing is paid for.
The link to homelessness follows from those numbers. When rents and prices climb faster than incomes and low-cost homes disappear, households with the least margin lose their footing first, and few affordable places remain to catch them. JCHS researchers add that the supply of low-rent housing is shrinking and that market forces alone are unlikely to meet the need for deeply affordable homes. That gap is why public agencies and non-profits are looking for faster ways to build.
The Modular Building Institute (MBI) reports that the U.S. permanent modular construction market reached $20.5 billion in 2025 and projects growth of 6.5 percent per year through 2030. Its 2026 reports, developed with FMI Consulting, find that multifamily housing remains the largest U.S. segment, that office and data centre construction is emerging as a significant opportunity, and that the U.S. West leads in market size, bolstered by housing affordability pressures and disaster recovery needs. In Canada, multifamily residential makes up nearly half of the projected modular market.
Tom Hardiman, CAE, Executive Director of the Modular Building Institute, says modular is gaining ground because it addresses “housing shortages, limited labor, rising costs and schedules that cannot keep slipping.”
Production is becoming more automated. A Siemens case study on the Admares smart factory describes 26 production lines where 141 robots perform skilled tasks such as welding, cutting, clamping, tiling, and carpentry. Digital twins let the company design and validate house parts, including heating and cooling systems, before production begins, and Admares is planning a first Australian smart factory in southeast Queensland, with investment of hundreds of millions of dollars and potentially 3,200 new jobs. The case study is written from the company’s point of view, so these figures describe capability and intent rather than independent results.
Research is pushing further. At the University of British Columbia (UBC), the Smart Structures Lab, headed by Dr. Tony Yang, combines artificial intelligence, robotics, and modular assembly to automate key stages of construction and monitor structural health in real time. The lab plays a central role in an $8.27 million national initiative, led by UBC Civil Engineering, to address housing supply through sustainable modular construction. UBC reports that modern modular technology can raise a 15-storey building in six days, with two days for the framework and four more for the envelope and utilities (real project schedules will of course vary).
Speed is the benefit of modular construction cited most often. MBI’s reports find that factory production can shorten project timelines by between a fifth and a half, while improving quality control, reducing onsite disruption, and helping owners reach occupancy sooner.
A factory also removes much of the uncertainty of building outdoors. UBC notes that making components offsite in a controlled setting bypasses delays and bottlenecks caused by weather and complicated logistics. CSA Group adds that governments and industry leaders increasingly look to modular construction to accelerate delivery, reduce waste, improve worker safety, and create more predictable outcomes.
Flexibility matters most for housing providers. Supportive Housing of Waterloo (SHOW), a Canadian not-for-profit housing provider in Waterloo Region, Ontario, offers round-the-clock wraparound support to people who have experienced long periods of homelessness and describes housing as a fundamental right, and it lists speed, durable materials with accessibility features, and the ability to add, move, or reconfigure units as demand changes among the reasons it chose modular.
The clearest evidence for modular’s role in combating homelessness comes from British Columbia. In 2017, the province committed $291 million to build 2,000 modular homes for unhoused people, with more than $170 million over three years for round-the-clock staffing and support services. 600 of the homes were planned for Vancouver, on city-owned land. By 2018, nearly 700 supportive homes had been completed across the province and a further 1,400 were underway. By 2019, the final set of temporary modular homes the province had committed to in Vancouver was opening, including 52 homes at 258 Union Street. Kennedy Stewart, then Mayor of Vancouver, said, “the fastest way to build homes is by investing in modular housing.” The province described the units as interim homes while permanent solutions were developed, which illustrates both the speed of the method and its limits.
Canada’s federal government has taken the approach national. Build Canada Homes, launched in September 2025, has a mandate to double housing construction, restore affordability, and reduce homelessness, with an intense focus on factory-built, modular, and mass timber methods. It plans to prioritize six federal sites for 4,000 factory-built homes, with capacity for up to 45,000 units across the portfolio, and to deploy $1 billion for transitional and supportive housing for people who are unhoused or at risk. In Nunavut, it is partnering to build more than 700 public, affordable, and supportive units, about 30 percent of them off-site. The agency says one of its objectives is long-term, predictable demand for Canadian factory-built housing so the industry can scale and the time and cost of construction can fall.
At community scale, SHOW demonstrates how this plays out on one site. It reports 2,371 people experiencing homelessness in the region and 630 waiting for supportive housing, with older adults the fastest-growing segment of the waitlist, up 120 percent in a year. SHOW already operates 64 units across three buildings. Its next step is Waterloo’s first modular supportive housing project for older adults, 10 fully accessible homes with 24/7 support at 362 Erb Street, with another 68 or more units in the pipeline for 2027 and beyond.
The project also shows the funding reality. As of early September 2026, SHOW was still raising money through its Moving for Good campaign to build the 10 units. Factory production can shorten the build, yet the schedule still depends on capital arriving first.
MBI’s reports identify financing gaps, permitting and regulatory inconsistency, uneven project pipelines, design coordination challenges, and a lack of modular experience among some project teams as obstacles to wider adoption. Each has a counterpart in the examples above. British Columbia’s modular homes needed years of operating funding for staff, not just construction money. SHOW’s units depend on fundraising. And the Waterloo project, like the federal agency’s purchasing plan, is a reminder that manufacturers need a steady pipeline of orders to justify their factories.
Codes and lending rules matter as much as technology, and CSA Group says clear and consistent standards help build confidence among designers, manufacturers, and building officials. In the United States, lenders and insurers still treat modular as an unfamiliar product, which is why Congress has asked for a federal review of the problem.
Policy is beginning to address those gaps. The 21st Century ROAD to Housing Act became law on July 11, 2026, without the President’s signature. Its Section 302, the Modular Housing Production Act, requires the Federal Housing Administration to assess barriers to FHA-insured lending for modular housing, and Section 303 updates mortgage lending standards for manufactured housing. The law contains 12 titles and 59 sections, and most of its modular provisions call for study rather than immediate funding, so the practical effect depends on how HUD implements them.
In Canada, CSA Group has released CSA Z251, Design of volumetric modular structures, a new National Standard of Canada that establishes a common technical framework for designing volumetric modular buildings. It complements the National Building Code of Canada and addresses structural design, building services, environmental separation, fire protection, manufacturing, and architectural considerations. A technical committee of architects, engineers, modular manufacturers, and provincial and municipal building officials developed it.
MBI observes that long-term demand is supported by population growth, aging public infrastructure, school capacity constraints, healthcare needs, labour shortages, housing affordability, and climate-related disaster response, and UBC’s Dr. Yang predicts that within five years, modular factory production and robotic on-site assembly will be commonplace. That is an optimistic timeline, and the housing figures above suggest the need will outlast it.
Modular construction is a delivery method rather than a cure. It cannot lower land costs, replace rental assistance, or provide the support services that keep formerly unhoused residents housed. What it can do is turn funding into finished homes sooner and with greater predictability, and the British Columbia and Waterloo examples suggest that is worth a great deal to the people waiting.
