I said this one would be less friendly. It’s less friendly, but I want to be fair about it, because the people on the other side of this argument are not wrong about everything. They’re right about the part they’re arguing and, from my chair, missing the part that matters.
Here’s what happened this summer. Most people in our business heard about one piece of it. There were two.
In June, HUD proposed a rule. It would reinterpret the federal definition of “manufactured home” so that only the lowest floor section of a multi-story unit has to be built on a permanent chassis. Upper floors could lose the steel and the axles. HUD put the savings at roughly $5,000 to $7,000 a unit. Comments closed August 11.
In July, Congress went further. The 21st Century ROAD to Housing Act became law and amended the definition itself — a manufactured home may now be built with or without a permanent chassis. The law also requires updated standards and state certifications so that chassis-free homes are treated on par with traditional HUD-code homes for financing, sale, installation and title. Most states have to certify by July 2027. States whose legislatures meet every other year get until 2028.
So this isn’t a proposal anymore. It’s law, waiting on rulemaking and on fifty state houses.
Not structurally. Let’s be honest about that.
HUD’s own reasoning is that the steel on an upper floor provides no practical benefit once the home is installed, constrains the design, and costs money. That’s correct. A permanent frame under a second story of a building nobody will ever move again is a few thousand dollars of dead weight. I’m not going to stand up and defend a requirement whose main effect is to make a house more expensive. If you’re waiting for me to say that part, you’ll have to wait.
What the chassis was was a marker. It was the one visible, physical thing that told you which legal category a house belonged to. A steel frame underneath means federal HUD code. No steel frame means IRC/IBC codes meet all state and local requirements.
Take the marker away, and you haven’t changed anybody’s structural safety. You’ve removed the last thing an ordinary person — a buyer, a planning board member, an appraiser, a lender — could actually look at to tell two very different regulatory regimes apart.
It isn’t the cost savings. It’s the asymmetry underneath them.
A modular home from our plant is built to your state’s building code — the IRC/IBC your state adopted, with your state’s amendments. The plans go through third-party review under your state’s program. The building is inspected in the factory and again at the site. Local zoning and site approval apply the same as any house on your street.
A HUD-code home is built to a federal standard that preempts state and local building codes. That preemption exists for good reasons and has a long history behind it. I’m not arguing it away.
But it’s worth being specific about what preemption actually means here, because most people hear it as a paperwork difference and it isn’t. When the federal standard preempts, your state’s requirements don’t apply — and in a number of areas the federal standard is set lower than the IRC/IBC your state adopted. Structural design loads are one: roof, snow, and wind provisions run off HUD’s own zone maps, which tend to be older, less detailed, and less stringent than your state’s. Thermal and energy performance is another. So are a range of dimensional and clearance requirements — ceiling heights, stair geometry, egress, and the like. HUD has updated its standards over the years and continues to, so this isn’t a frozen picture, and it isn’t a claim that HUD-code homes are unsafe. It’s a plain statement that the two code books ask for different levels of performance, and the differences generally run in one direction.
But here’s where we are now: those two products can be multi-story, can look identical, can sit side by side on the same street, and one of them meets the more stringent IRC/IBC code requirements and one of them does not. Until this summer, there was a chassis to point at. Now there isn’t.
The response I keep hearing is a fair one — that none of this touches modular, because modular is still governed by the IRC/IBC and nothing about our rules changed. True as far as it goes. Nothing about our obligations changed. What changed is what we’re competing against, and what a planning board or a lender or a buyer can perceive about the difference.
I’d put the question this way: if two houses are physically the same, why are they built to two different codes? That’s a real question, and “because one of them has a steel frame under it” was never a good answer. It just used to be an answer.
Here’s the part our industry can actually fix, and hasn’t.
Manufactured. Modular. Prefab. Factory-built. Off-site. Systems-built. Those words get used interchangeably by the press, by appraisers, by lenders, by town officials, and by half the people selling this stuff. They mean different things. They carry different codes, different financing, different titling, different resale.
When there was a chassis, sloppy words didn’t do as much damage — somebody could go look. Now the words are carrying the entire weight of the distinction, and our words are a mess.
That costs everybody. It costs us when a modular building gets treated as a manufactured home by a planning board that doesn’t know the difference. It’s about to cost HUD-code builders too, when a genuinely good new multi-story product walks into a market carrying forty years of stigma it didn’t earn, because nobody can explain what it is.
I’d rather compete against a product that’s clearly labeled than share a fog with it.
Three things, and none of them are “stop.”
Say the code, plainly. At the point of sale, in the listing, in the appraisal: what code was this house built to? Not a marketing word. The code. The code a house was built to is the clearest, most honest way for a buyer to understand the performance that house is actually required to deliver — how it’s designed to handle snow and wind, what it will cost to heat, how it’s expected to hold up over thirty years. Everything else we put in front of buyers is a description. The code is the specification. If we did only that one thing, most of the confusion would go away.
States should treat the certification year as a decision, not paperwork. The new law tells states to certify that they’ll treat chassis-free homes on par with traditional HUD-code homes. That’s going to arrive in most state houses looking like a routine box to check, and it isn’t one. Certifying settles how these homes get titled — real property or personal property — and that in turn drives how they’re financed, appraised, taxed, and resold. It’s also the natural moment for a state to look at where its own code and the federal standard diverge, and decide what, if anything, it wants to do about that. Maine has until July 2027. I’d like to see Augusta spend some of that time on it rather than run it through on the last day.
And HUD should finish the other half of the job. The same law requires a review of FHA construction-financing barriers for modular developers, with a report due July 2027. That review needs to get to the draw schedule, because it’s the single biggest obstacle in our business. Lenders release construction funds as work progresses on site — which means a factory builder waits on money for work that’s already been done, indoors, months earlier. We front the materials, the labor, and the floor space, then wait for a draw tied to a foundation. Fix that, and you’ll add more housing units than any amount of steel you take out from under a second floor.
Some of my discomfort here is competitive. I’m not going to pretend otherwise — I run a plant that builds to IRC/IBC, and I have an obvious interest in people knowing the difference.
But the argument I’d make in front of anybody, including in front of the folks building HUD-code homes, doesn’t depend on that. The chassis was a lousy way to draw an important line. Removing it was defensible. Removing it without replacing it with something honest — clear labeling, an actual conversation in each state, and a financing system that doesn’t work for factories— leaves us all worse off, buyers most of all.
HUD’s own analysis figured the multi-story piece might touch twenty or twenty-five units a year to start. That’s a rounding error in a housing shortage. The precedent it sets is not.
Next week I’ll get back to something more useful and less regulatory: what actually happens on set day, and the handful of site decisions that determine whether it goes well.
If you think I’ve got this wrong — and some of you will — I’d like to hear it.
— Thatcher
