The HUD Offsite Construction Research Roadmap

The HUD Offsite Construction Research Roadmap

Operation Breakthrough was intended to demonstrate the value of industrialized housing construction methods and reduce or eliminate barriers to using these methods.

The housing affordability crisis in the United States is multifaceted and longstanding. One factor contributing to high housing costs is the inability of the residential construction industry to supply enough new housing units to meet demand. In 2020, Freddie Mac estimated a national deficit of 3.8 million housing units. One strategy to increase the productivity of the homebuilding sector is to encourage the adoption of offsite construction systems. Offsite construction systems, also called “factory-built” or industrialized housing construction systems, involve fabricating or assembling the major components of a building at a centralized location and then shipping them to the site for installation. Although these systems are widely used abroad (with adoption rates ranging from 15% of the housing market in Japan to 45% in parts of Northern Europe) and confer cost-, time-, and labor-saving benefits, they are underutilized in the United States.

At a June 10 virtual event titled “Research at HUD: Past, Present, and Future of Offsite Construction,” which was held as part of the 2022 Innovative Housing Showcase in Washington, D.C., HUD Deputy Secretary Adrianne Todman discussed the HUD Offsite Construction for Housing Research Roadmap. Devised by HUD, the National Institute of Building Sciences (NIBS), and MOD X, the Roadmap describes HUD’s six research priorities and guidelines to foster the adoption of industrialized construction. Todman was joined by researchers Ryan Smith, who presented on the development of the Roadmap, and Ivan Rupnik, who discussed HUD’s historic leading role in the development of industrialized housing.

Six Research Priorities

HUD contracted with NIBS, a nonpartisan government nonprofit, to develop the Roadmap. MOD X, a research and consulting firm specializing in industrialized building, participated as the project technical committee chair. Ryan Smith, a partner with MOD X, board member of the NIBS Off-Site Construction Council, and director of the School of Design and Construction at Washington State University, described the Roadmap as a tool to benefit the construction industry at large. Although the Roadmap has been released to HUD as a final draft report, it is not yet available to the public.

The report reflects six primary research priorities ranked in importance from what the researchers refer to as priority 1 to priority 2b. The top priority topics are “Regulatory Framework” and “Capital Finance and Insurance.” The second priority topic is “Standards and System Performance,” which includes a subtopic, “common terminology,” because the sheer variety of terms applied to offsite construction can make any discussion of the field confusing. The final three research topics, in the third priority category, are “Project Delivery and Contracts,” “Labor and Workforce,” and “Business Models and Economic Performance.” Because the topics are necessarily interrelated, Smith recommends conceiving of the priority list as a network diagram of topics for further inquiry. 

In her opening remarks, Deputy Secretary Todman explained that HUD’s promotion of offsite construction is one of the “actionable solutions” put forward by the Biden administration’s Housing Supply Action Plan in May 2022. Todman explained that HUD has been at the forefront of offsite construction research in the past, notably in the 1969 demonstration project Operation Breakthrough. This experiment was regarded as unsuccessful at the time. But, Todman said, “Perhaps it wasn’t a failure. Perhaps it was just innovation before its time.”

Reconsidering Operation Breakthrough

To elaborate on Operation Breakthrough’s unacknowledged successes, Ivan Rupnik, a partner at MOD X and associate professor of architecture at Northeastern University, summarized its history. Begun under HUD Secretary George Romney in 1969 and running until 1974, Operation Breakthrough was intended to demonstrate the value of industrialized or factory-built housing construction methods and reduce or eliminate barriers to using these methods. The federal government wanted to spur the production of affordable housing to relieve the housing crunch and enable the U.S. housing construction industry to compete with that of the Soviet Union, whose industrialized systems helped it vastly outproduce the United States.

Up to 40 different housing manufacturers participated in Operation Breakthrough, developing 22 housing systems. These manufacturers deployed approximately 3,000 units at 9 sites across the country, mostly in multifamily buildings: 46 percent of all Operation Breakthrough units were in apartment buildings that were 4 stories or higher, and 47 percent were in buildings consisting of 2, 3, or 4 units. The remaining 7 percent of units were single-family homes. Most of the 22 systems — which included volumetric modular, panelized, and other varieties of offsite construction — had not been produced before and have not been produced since.

Because the housing systems built for the demonstration did not enter wider production, contemporary observers regarded Operation Breakthrough as a failure. Other factors affected the success of the experiment, including a global decrease in population rates that reduced demand for new housing as well as the unexpected cancellation of a HUD mortgage program for the Operation Breakthrough units. Rupnik argues, however, that the impacts of Operation Breakthrough extended beyond the popularity of the units its participating builders produced — impacts that are felt to this day in the contemporary construction industry.

Notably, Rupnik said, the program encouraged states to adopt standardized building codes, eliminating the conflicting local codes that often presented a barrier not only to industrialized construction but also to traditional construction projects. In 1976, the Manufactured Home Construction and Safety Standards — a building code for manufactured housing units that is commonly called HUD Code — became the first national building code. Operation Breakthrough also originated all regulations governing the transport of factory-produced housing to the job site, whether over road or rail. In addition, Rupnik said, Operation Breakthrough exposed builders to new construction methods and materials and introduced new methods of evaluating construction. “Operation Breakthrough shaped the current United States offsite regulatory framework,” said Rupnik.

Looking Back To Move Forward

While preparing the Research Roadmap, MOD X and NIBS studied Operation Breakthrough, the research that preceded and informed it, and the subsequent retrospective reports. “This Roadmap comes on the heels of 1976, not necessarily the last year,” said Smith. This retrospective was necessary to understand the offsite construction environment that exists in the United States today. The researchers also looked forward, however, with the goal of understanding what the residential construction industry of today needs to make fuller use of this housing production paradigm. By working together, HUD and its partners in academia and industry can use offsite construction as one method to combat housing supply deficits.