California Governor Gavin Newsom is signaling a major pivot toward modular, prefab, and industrialized construction methods as he enters the final year of his governorship—indicating that housing production reform may soon extend far beyond land-use planning. In a detailed conversation with journalist Ezra Klein on The Ezra Klein Show, Newsom laid out a broader strategy focused on factory-built homes, advanced materials, and technology-enabled productivity gains that could redefine how California builds housing.
The discussion centered on the industry’s decades-long struggle with stagnant productivity. Klein pointed to international models, including Sweden’s widespread use of offsite manufacturing, as evidence that modular systems can thrive even in unionized environments. Newsom agreed, describing modular and tech-forward building as an emerging pathway to unlock supply in regions hit hardest by labor shortages, high land costs, and prohibitive construction timelines.
Newsom also referenced companies using new materials originally developed in collaboration with NASA, as well as innovations like 3D printing and AI-optimized design workflows. “We’re about to experience a completely different shift on the productivity side,” he told Klein, “because of necessity, because of the reality, because of the crisis of affordability.” While much of his administration’s recent efforts focused on streamlining approvals, his latest remarks suggest that transforming the production of housing may become a core policy direction.
Newsom hinted that industrialized construction will become central to his 2026 agenda. “If there’s a big preview for California in my last year, it’s in this space legislatively to take it to the next level,” he said. His comments indicate that modular, prefab, and factory-based construction methods may feature prominently in the next round of housing legislation, potentially reshaping statewide building standards, procurement pathways, and public-sector development models.
The governor also acknowledged that rapid technological adoption poses political and labor challenges. Klein highlighted concerns about industrial relations as innovation accelerates, and Newsom admitted the shift “holds a lot of political peril in the context of the politics within labour,” though he emphasized that the state cannot afford to sidestep these issues as affordability worsens.
California built just 110,000 homes last year, even after significant changes to approval laws—including 42 amendments to the California Environmental Quality Act (CEQA) and expanded pathways for infill housing and ADUs. Newsom called the results “completely, completely underwhelming,” underscoring his belief that boosting output will now require advancements not only in permitting but in how housing is actually manufactured.
The new approach reflects a growing recognition that California’s housing crisis cannot be resolved by planning reform alone. With wildfire rebuilds, affordability pressures, and labor shortages converging, statewide leaders are increasingly exploring industrialized construction as a way to scale production more quickly, more efficiently, and with higher predictability.
Prefab initiatives—such as UCLA’s new Prefab Housing Handbook for communities affected by the Eaton Fire—already demonstrate how offsite manufacturing can support recovery and resilience efforts. Newsom’s comments suggest that these types of programs could soon inform broader statewide policy.
As 2026 approaches, California appears poised for one of its most significant shifts in construction strategy in decades—positioning modular, prefab, and technology-enabled building at the center of the state’s housing future.
Originally reported by Built Offsite.
