Sandwell Council has agreed to buy 41 of them to boost its own housing stock
The properties are being built in modular sections by Mar City Homes on the former Atlas Metals site in Smethwick. They will then be transported and assembled on permanent foundations on site.
Site clearance work has begun and the council homes are expected to be ready for handover in summer 2015.
Mar City Homes chief executive Tony Ryan said: "Mar City strongly believes modular construction is the future of UK house building and we are delighted to showcase our innovative method through our partnership with Sandwell Council.
"We are committed to building homes that benefit people's lives and communities and we look forward to building a strong and lasting relationship with Sandwell Council. By employing modular technology, we are able to deliver economically and energy efficient homes."
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