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Is It Cheaper to Buy a Prefab Home or Build? Types & Costs

a beautiful house with lawn

If you are looking to build your home, there are many decisions that you need to make, but the construction cost and time to build are likely the biggest. Many people struggle with deciding whether to purchase a prefab home or build one from scratch, as it can be difficult to know which is more expensive. If this sounds like your situation, keep reading as we take a closer look at both options. Buying a prefab house is usually cheaper than a traditional build.

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Is It Cheaper to Build or Purchase a Prefabricated Home?

housebuilding construction site
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In most cases, a prefabricated home will cost less than the one that you build from the ground up, with many saving an average of 10% to 20% over a traditional construction project. Traditional homes also take 1–4 months longer to build than a prefab, so you’ll be able to live in it sooner.

What Is a Prefabricated House Made Of?

Prefabricated homes are built in a factory and assembled on large steel beams that the company then transports to your land in complete sections. Once the parts arrive, builders can quickly assemble them and remove the wheels, hitch, and axles so the building can sit securely on the foundation.

Why Do Prefabricated Houses Cost Less?

Prefabricated assemblies help reduce labor costs, installation errors, and other problems that can occur when building on-site that might lead to a more expensive project. Contractors will need fewer people to complete the building, they won’t need nearly as many supplies and materials, and they will finish the work much faster, with many prefab homes going up 25% to 50% faster than a traditional building.

house construction
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What Are the Advantages of Purchasing a Prefabricated Home?

  • Since prefabricated homes go up faster than traditional homes, you can live in one 50% sooner.
  • Prefabricated homes usually cost less than a traditional house, and they produce less waste that you need to eliminate.
  • Prefab homes are built in a factory with tight specifications, meaning they are usually more durable.
  • Since the different components of a prefab home fit together tightly, they are usually more energy efficient than traditional homes, saving you on heating and cooling.
  • Prefab houses offer more design opportunities because they are less expensive to build, and prefab companies will have many options on display.

Are There Any Disadvantages to Purchasing a Prefabricated Home?

The biggest disadvantage to purchasing a prefabricated home is that some parts can get damaged during transport, especially if you live far from the factory. A long transport can lead to joint failures, leaks, cracks, and other issues, so you will need to inspect the prefab carefully when it arrives to make sure no damage has occurred. Contractors can also have a difficult time assembling the different parts, and they may require special tools.

house divider Types of Prefabricated Homes

Modular Homes

A modular home will have one or more modules that fit together to create a house. Each module is a complete unit, containing stairs, plumbing, doors, electrical wiring, and more, so they go up quickly, and many people can move inside in just a few months.

modular home
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Panelized Homes

A panelized home is a house that manufacturers make from several panels. A panel is typically a whole wall, and each will arrive at the home requiring assembly, so it’s more work than a modular home, and it will take longer for you to move in, but it’s a good choice if you want your home to look like a traditional build.

Pre-cut Homes

Many people will call a pre-cut home a “kit,” and it’s a popular choice for log cabin-style houses. This type of home is more DIY than a panelized home, as not all include full walls or ceilings and instead require you to build a cabin from pre-cut logs and framing materials, so it can take a while to move in.

Brown Cabin in the Woods on Daytime log house
Image Credit: Eneida Nieves, Pexels

Shipping Container Homes

Shipping container homes are becoming more popular because they are inexpensive and recycle old shipping containers, making them better for the environment. You can assemble several containers to create a larger home, much like a modular home, but the resulting build is usually smaller.

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What Will I Still Need to Buy If I Purchase a Prefab Home?

A prefab home will likely have lower costs for materials and labor than a traditional building. However, there are several things that you will still need that will cost the same.

Things you will still need:
  • You will need to find and purchase land to build your house.
  • You will likely need to test the soil for lead and other harmful items.
  • You will likely need to survey the land to ensure correct borders.
  • You will need utility hookups, including underground water septic or waste pipes, electric cables, and gas lines.
  • Most manufacturers do not include the foundation for the prefab house.
  • You will need to pay for any required landscaping.
  • You will need to purchase and install any driveways or sidewalks.
  • A garage or carport will likely be a separate purchase or project.
  • You must locate and hire a qualified contractor to build your prefab.

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Buying a prefab house is usually cheaper than a traditional build because the building process is more streamlined. Assembly requires fewer workers and supplies and typically goes faster than with a traditional building. There’s also less cleanup, fewer wasted materials, and less risk of an error or problem, though some damage can occur during transport. That said, once you purchase the prefab, you will still need a foundation, sidewalk, driveway, and buildings like the garage or shed to complete your homestead.

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