New York Invests Big in Factory-Built Housing to Tackle Affordability Crisis

As part of the FY 2026 budget, New York State has launched an ambitious and multifaceted housing plan with one clear message: factory-built housing is key to unlocking the state’s affordable housing future. With more than $1.5 billion in new capital committed to expanding the housing supply, Governor Hochul’s administration is elevating modular, manufactured, and other off-site construction methods as a core strategy to deliver more homes, faster and at lower cost.

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Factory-Built Homes: A Scalable Solution to a Statewide Crisis

Traditional site-built housing in New York faces increasing barriers, high construction costs, limited labor, regulatory red tape, and aging infrastructure. Factory-built homes offer a compelling alternative: streamlined production, faster timelines, and significant cost savings. Recognizing this, the FY 2026 budget explicitly includes $50 million to incentivize the creation of more affordable starter homes, with an emphasis on modular and factory-built development.

These homes not only address affordability but also improve energy efficiency, reduce waste, and offer design flexibility that can meet the needs of families, seniors, and single-person households alike.

Public Funding Supports Modular Momentum

In addition to starter home development, factory-built housing stands to benefit from several other major funding streams:

• $100 million for the Pro-Housing Supply Fund, supporting municipalities with infrastructure improvements needed to accommodate new housing, especially helpful for communities embracing modular and infill housing types.
• $30 million in Infill Housing funds, which can help place small, factory-built homes on underutilized lots in urban, suburban, and rural settings.
• $100 million in mixed-income revolving loan funds, which can finance rental developments using modular construction, filling critical financing gaps often faced by developers of factory-built projects.

These investments are designed to speed up production timelines and scale housing development without compromising quality.

Overcoming Barriers: Zoning, Financing & Innovation

While factory-built housing is gaining traction, its expansion is often hindered by zoning restrictions, outdated building codes, and access to financing. The FY 2026 budget takes a proactive approach to remove these barriers:

• $5.25 million in technical assistance will help local governments modernize zoning and permitting to welcome more factory-built projects.
• New laws aim to discourage institutional investors from dominating the single-family housing market, protecting space for homebuyers interested in modular starter homes.
• Affordable homebuyer tax incentives will apply to homes built by nonprofits or with public assistance, many of which are now embracing factory-built models for affordability and efficiency.

Together, these steps create an environment that’s more supportive of innovative housing methods.

Revitalizing Communities with Factory-Built Homes

Factory-built housing is also central to New York’s efforts to reclaim vacant and blighted properties. Many municipalities lack the resources to redevelop these lots with traditional construction. However, with $50 million allocated for land banks and a new authority for local tax incentives, modular homes provide a quick and cost-effective solution to revitalize housing in disinvested neighborhoods.

Paired with $40 million for upgrading vacant rental units and $10 million for rural multifamily development, these programs open the door for factory-built housing to serve a wide range of markets and housing types, from small infill homes to larger supportive housing campuses.

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Looking Ahead: Building Smarter, Faster, Fairer

New York’s FY 2026 housing budget marks a turning point in how the state approaches construction. Factory-built housing is no longer viewed as a niche product; it’s being embraced as a mainstream solution to meet urgent needs. Whether through starter home incentives, infill redevelopment, or innovative financing tools, New York is laying the foundation for a faster, fairer, and more affordable housing future powered by off-site construction.

As other states look to solve their own affordability crises, New York’s bold integration of factory-built housing may become a national model.