CoreHaus has set up a 20,000 sq ft factory on Jade Business Park in the village of Murton, near Seaham, midway between Sunderland and Hartlepool.
The company has a plan to produce around 1,000 steel-framed modular homes a year within five years. It has £6m or orders so far.
CoreHaus is a joint venture between Newton Aycliffe based Carlton & Co Group (parent company of Homes by Carlton) and Liverpool-based public procurement agency Fusion21.
It has 12 employees so far but plans to have 300 as it gets going.
CoreHaus managing director Scott Bibby, a former production manager at Hitachi Rail, said: “We know the housing sector wants something that’s both affordable and incorporates high-quality design within a modular frame. We are already in discussions with several regional and national housing associations interested in working with our product.
“Our light gauge steel-frame system ensures that CoreHaus can be used in both urban and rural locations with elevation treatments tailored to suit each setting, providing almost unlimited design potential. The standardised modular core means the solution can be configured for homes of almost any size.”