Prefabricated Construction: Data and Trends in 2025
- TKH Construction
- May 17
- 9 min read
Updated: May 18

Prfeabricated and modular construction methods are transforming how buildings are designed and delivered. By manufacturing components off-site and assembling them on-site, prefab aims to speed up construction, reduce costs and waste, and improve quality. But how widely are these methods used today, and what impact are they having? This post examines recent data (2023–2025) on prefab adoption, market share, growth trends, and the proven advantages of building off-site, backed by current statistics and industry references.
Adoption of Prefab in Today’s Construction Industry
The construction industry is increasingly embracing prefabrication, but adoption is uneven. A majority of contractors have at least some experience with prefab. In a 2024 industry survey, 86% of contractors reported that they currently offer single-trade prefabrication services (e.g. assembling mechanical or electrical components off-site)¹. This indicates that most large builders and specialty trades have begun integrating prefab elements into their projects. Similarly, a global construction survey found that 84% of engineering & construction firms view prefabrication as an important solution for project delivery challenges².
However, full-scale modular adoption remains limited to a minority. That same global survey noted that only about one-quarter of firms (≈25%) use modular construction across all their projects². In other words, while many companies have tried prefab on at least a few jobs, far fewer have made it a standard practice for every project. Prefab is still often used selectively, in specific project types or trades, rather than as a blanket approach.
This gap between interest and implementation highlights the current state of the industry: prefab is widely regarded as promising, but not yet the default construction method. The drivers behind its growing popularity – and the barriers to its universal adoption – become clearer when looking at market share and performance data, as well as the benefits prefab brings.
Prefab’s Share of the Construction Market
Even with growing adoption, off-site construction still represents only a small fraction of total building activity in most regions. In the United States, prefabrication accounts for just a sliver of new construction by volume. Recent data shows that only ~2% of new single-family homes in the U.S. were built using modular or panelized methods in 2022³. The penetration in multifamily housing was even lower – roughly 1% of new apartment buildings used prefab methods that year³. These figures underscore that traditional stick-built construction remains the norm for 98–99% of U.S. homebuilding.
Looking at North America overall, prefab has a somewhat higher foothold when commercial and institutional projects are included, but it’s still in the single digits. According to the Modular Building Institute, modular construction captured about 6.6% of all new North American construction starts in 2023⁴. This was equivalent to roughly $14.6 billion in project value built with modular approaches. While 6–7% share is an improvement from past years, it means over 90% of new buildings are still constructed primarily on-site.
Other regions show a starkly different picture. Prefab’s market share varies greatly around the world, with some countries leading the way. In Japan, for example, around 15% of new homes are built using off-site methods³ – a much higher proportion than in the U.S. And in parts of Northern Europe, prefab is near mainstream: approximately 45% of all housing in Finland, Sweden, and Norway is produced off-site in factories³. Germany also sees about 10% of its homes built with modular techniques³. These examples show that prefab can be scaled up significantly under the right market conditions (such as strong manufacturing infrastructure, supportive codes, and cultural acceptance of modular homes).
Globally, prefab construction remains a relatively small slice of the multi-trillion-dollar construction sector, but it’s growing. Analysts estimate the global prefabricated building market was about $228 billion USD in 2023⁵. For context, this is only a few percent of the total global construction output (which exceeds $10 trillion). Yet this prefab segment is expanding faster than traditional construction. By 2029, the global prefab market is projected to reach $345 billion – rising roughly 7% annually in the latter 2020s⁵. In short, while off-site construction is still emerging on the world stage, its share of the industry is steadily climbing year by year.
Prefabricated Construction Trends 2025: Growth and Projections
All signs point to prefabrication rapidly gaining momentum in the coming years. Both market analyses and contractor surveys anticipate robust growth in the prefab/modular sector, driven by the pursuit of productivity gains and the pressure of skilled labor shortages in construction.
In North America, the trend is clearly upward. The modular industry’s own data shows its footprint has more than tripled in under a decade. Back in 2015, modular building accounted for only about 2.1% of new construction starts in North America⁴. By 2023, that share grew to 6.6% of new starts⁴. Project value delivered via modular methods rose from roughly $3.7 billion in 2015 to $14.6 billion in 2023⁴. This steady growth trajectory illustrates accelerating adoption of prefab techniques across various sectors (from multifamily apartments to offices and schools). The market diversification is also notable – modular construction is now used in multifamily housing, government and office buildings, education facilities, retail, healthcare and more⁴, whereas it was once focused on niche uses.
Looking forward, forecasts predict strong continued growth for prefab construction globally. As noted, the worldwide prefab market is expected to expand ~7% per year through the rest of the decade⁵. Grand View Research projects the global prefabricated construction market will reach ~162 billion by 2030 (up from 100 billion mid-2020s)⁶, aligning with similar growth estimates. This outpaces the growth of many traditional construction segments, reflecting a significant shift toward industrialized building methods.
Importantly, industry practitioners themselves anticipate a major ramp-up in prefab usage. A 2024 survey by FMI found that contractors plan to roughly double their use of prefabrication in the next five years. At the time of the survey, contractors reported about 18% of their total craft labor hours were spent on prefab assemblies; they expect that to rise to 34% of labor hours within five years⁷. In other words, builders foresee prefab constituting about one-third of project work by the end of the decade, versus less than one-fifth today. This is a dramatic jump in integration on job sites.
Likewise, on a global project level, the prevalence of prefab is set to multiply. KPMG’s 2023 Global Construction Survey indicates that the share of projects using mostly modular/off-site methods will double in the near future. Currently, only around 13% of projects worldwide use modular construction for at least half of their project delivery, but this is expected to reach 27% of projects in the next five years⁸. Such a shift would mean a considerable portion of construction projects around the world will be built predominantly with prefabricated components by the late 2020s.
Key factors are fuelling this growth trend. One driver is the chronic skilled labor shortage and productivity challenges in construction – prefabrication offers a way to do more with fewer on-site workers by leveraging factory automation. FMI’s study noted the industry’s receptivity to prefab correlates with ongoing labor shortages and compressed project schedules that demand efficiency improvements⁷. Another factor is technology and investment: many firms are investing in modern methods of construction and recognizing that to stay competitive and meet demand (especially for housing), they must adopt modular techniques. Government and owner attitudes are also shifting to favour off-site building for its potential to save time and reduce risk. All these elements suggest prefab construction will continue its ascent and possibly become a mainstream construction approach in the not-too-distant future.
Advantages of Prefab Construction (Backed by Data)
Why are so many contractors and developers turning to prefabrication? Off-site construction offers several compelling advantages over traditional stick-built methods, and these benefits are being demonstrated in real-world data. Below are some of the key advantages of prefab, supported by recent statistics and industry findings:
Faster Project Delivery: Prefab construction significantly shortens building timelines. By fabricating components in parallel with site preparation, projects can be completed much sooner. Analysis by McKinsey suggests that modular techniques can accelerate overall project schedules by 20% to 50% end-to-end⁹. For example, in U.S. homebuilding, the time from permit to completion for a modular home in 2023 was about eight months – nearly two months faster than a comparable site-built home¹⁰. Faster delivery not only saves time, but also translates to lower financing costs and the ability to start using the building (or generating revenue from it) sooner.
Cost Savings and Efficiency: Building in a factory can also reduce construction costs through economies of scale and labor efficiency. McKinsey’s research estimates that switching to modular construction can cut building costs by up to 20% in suitable scenarios⁹. These savings come from optimized material use, bulk purchasing, and reduced labor requirements on-site. Additionally, controlling the environment minimizes delays (e.g. weather interruptions) and errors that lead to costly rework. One case study by the Center for American Progress found modular techniques lowered the construction cost per unit enough to make more housing developments financially viable¹⁰. While prefab may not always guarantee cost reduction, it consistently improves productivity – allowing more output with the same or less input, which is crucial in an industry notorious for low productivity growth.
Improved Quality and Consistency: Prefabrication is done in a controlled factory setting with repeatable processes, which often yields higher quality components and fewer defects. Construction crews on-site benefit from precise factory-made assemblies that fit together as designed, reducing on-site errors. In a recent contractor survey, “improved quality” was ranked as the greatest benefit of prefabrication⁷. Many builders report that prefab components have better workmanship and consistency, since they are produced using jig fixtures, automation, and strict quality control far from the weather and site constraints of a traditional job. This higher quality can mean less punch-list fixing, fewer callbacks for repairs, and better performance of the finished building (for instance, tighter seams improving energy efficiency).
Waste Reduction and Sustainability: One of the most dramatic benefits of off-site construction is the reduction in material waste. Because factories can optimize cutting and use precise measurements, they generate far less scrap than on-site fabrication done by hand. According to a WRAP report from the UK, modular construction can reduce waste of materials like timber, concrete, plastics, and cardboard by up to 90% compared to conventional building⁴. Factories can also more easily recycle scraps and off-cuts that in a field environment would go into a dumpster. This means prefab not only lowers waste disposal costs but also shrinks the environmental footprint of construction. Less waste and the ability to design for material efficiency contribute to prefab being a more sustainable approach. Additionally, prefabrication often allows better integration of eco-friendly materials and systems (like improved insulation modules, or solar panel components installed in factory), further boosting the sustainability profile of projects.
Enhanced Safety for Workers: Building in a controlled factory setting is generally safer for workers than traditional on-site construction. Factory assembly removes workers from many of the hazards of an open construction site – such as falls from heights, heavy equipment accidents, and exposure to bad weather. KPMG’s global survey notes that modular/off-site construction reduces dangerous on-site work and is a key way to improve construction safety records². Some studies have reported that shifting activities to controlled environments can lower on-site accident rates by as much as 70% relative to conventional methods. Fewer workers and shorter durations on the job site mean fewer opportunities for injuries. Moreover, factories can enforce safety standards (PPE, machinery guards, etc.) more strictly than the chaos of a busy site. In sum, prefab methods create a work environment where risk is more manageable, leading to safer outcomes for construction labourers.
Each of these advantages – speed, cost, quality, waste, and safety – is backed by industry data and experience. Prefab construction not only promises theoretical benefits; it is delivering measurable improvements on real projects. For instance, developers have seen months shaved off schedules and significant labor savings, contractors have reported higher profit margins on prefab-heavy projects, and sustainability reports show major waste reductions. These hard numbers are driving the strong interest in modular building techniques.
Conclusion
Prefabricated construction is on the rise, reshaping the construction landscape with its efficiency and innovative approach. As of 2025, we see that a large portion of construction firms are experimenting with prefab, yet the overall market share of off-site building is still in single digits in many regions. Current statistics highlight both the slow adoption to date and the huge potential for growth: only 1–2% of U.S. housing starts use prefab, but projections show the global prefab market growing to hundreds of billions of dollars within a few years, and contractors expecting to double their usage of these methods. The momentum is clearly building.
The data also reinforces why this shift is happening. Prefab offers faster completion times, cost efficiencies, better quality control, less waste, and safer working conditions – all critical improvements for an industry under pressure to modernize. These advantages, quantified by recent research and case studies, lend credibility to the prefab movement and give companies tangible reasons to invest in off-site construction capabilities.
In summary, prefabrication and modular construction are transitioning from niche techniques to mainstream solutions, supported by compelling data on performance. If current trends continue, the next decade could see prefab methods become a significant portion of the construction industry worldwide. For companies in construction, now is the time to pay attention to the numbers and success stories emerging from prefab projects. The prefabricated construction trends of 2025 point to an irreversible shift—off-site building is no longer the future; it’s the present. The statistical evidence suggests that embracing off-site construction is not just an innovation – it’s increasingly a smart business strategy for the future of building.
Sources
Building Design+Construction – Contractor Prefabrication Usage Survey (2024).
KPMG Global Construction Survey (2023).
Center for American Progress – Housing and Modular Construction Report (2023).
Modular Building Institute – 2024 Modular Construction Annual Report.
Research and Markets – Global Prefabricated Building Market Outlook 2024–2029.
Grand View Research – Prefabricated Construction Market Projections (2030).
FMI / Building Design+Construction – FMI Prefab Study (2024).
KPMG – Global Construction Survey (2023).
McKinsey & Co. – Making Modular Construction Fit (2023).
Urban Institute – Encouraging Modular Construction (2024).
Comments