Modular construction could help address the housing shortage

"The findings suggest that modular methods can reduce labor needs by up to 40%, speed project timelines by as much as 50%, cut costs when executed at scale and even reduce emissions. As a result, the modular industry poses a solution to some of the construction industry's biggest challenges including but not limited to costs, worker shortages and housing demand."

"But the modular market is highly fragmented, with few large players and more than 500 companies with less than $58 million in revenue. Companies that handle both manufacturing and assembly typically reported stronger margins, averaging 15% to 20% EBITDA, compared with 5% for manufacturers alone. McKinsey said that approximately 60% of modular companies operate in the single-family housing segment. But profitability is higher for hotels and health care facilities, where standardized factory production can offset higher costs and specialized requirements."

"When you do it in a factory, you can leverage much more automation, or semi-automation, and production lines. You can build much more with much less labor, Erlend Spets, one of the co-authors of the report and an associate partner at the firm's Oslo office, told HousingWire in an interview. Given the rise of modular business in the housing industry, Spets said that he and his co-authors are seeing a significant increase in demand, especially when it comes to solving the affordable housing crisis."

Modular methods can reduce labor needs by up to 40%, speed project timelines by as much as 50%, lower costs at scale, and reduce emissions. The market is highly fragmented, with few large players and more than 500 companies earning under $58 million in revenue. Companies that combine manufacturing and on-site assembly report stronger margins, averaging 15%–20% EBITDA versus about 5% for manufacturers alone. Around 60% of modular firms focus on single-family housing, while hotels and health care projects see higher profitability because standardized factory production offsets specialized requirements. Factory production enables greater automation and output with far less labor. Innovation and digital solutions are driving demand, with many firms operating in North America.

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