Should US homebuilders emulate Sweden?

A common sentiment I see with folks interested in improving US homebuilding is that we should try and emulate Sweden. More specifically, that we should emulate Sweden’s large-scale adoption of prefabricated construction. Something like 85% of Swedish single family homes, along with 30-40% of multifamily buildings, are factory-built, produced in large, impressive-looking factories like Lindbäcks. Per this line of thinking, the main problem with US housing construction is that it’s still done on-site instead of within a more efficient factory, and Sweden shows that it’s possible for prefabrication to be the primary method of home construction. Here, for instance, is this idea being discussed by governor of California Gavin Newsom on a recent episode of the Ezra Klein show:

Ezra: I want to slow down what you just said here, just for people who are not as into the modular housing debate as we are.

Ezra: So right now, building housing is: Guys show up with hammers.

Gavin: Same way they have been since the beginning of time.

Ezra: This is why productivity is down.

Gavin: Yes.

Ezra: There’s no place in America that does a ton of off-site manufactured housing. But in Sweden, I think more than 80 percent of single family homes are now off-site manufactured. You can have modular build, as many places do, in unionized factories.

Gavin: That’s right.

According to this theory, prefab is like lots of other US building practices such as transit construction or elevator installation: we simply need to adopt the best practices that are already being successfully used in Europe.

I think Swedish prefab construction is impressive, and there’s undoubtedly things US builders can learn from it. But for single family home construction, I don’t see much evidence that prefab has been particularly helpful in improving construction productivity, or driving down building costs. For multifamily, the evidence that prefab is helping drive cost savings is somewhat better, though I’m not particularly confident of that.

Swedish construction statistics

One nice thing about Sweden is that the government provides a lot of statistics on various aspects of the construction industry. The government provides both a construction cost index (which tracks the cost of inputs to single and multifamily construction, such as materials and labor), and a building price index (which tracks the price of completed single family homes and multifamily apartment buildings). Each of these are graphed below. ...