There's no reason in new normal houses, but it is very often impossible to do it sensibly in the existing housing stock.
But then there is no reason houses shouldn't be built in factories, shipped to site and assembled. After all we already do that for hotels and the like. Yet that hasn't happened yet either.
Even the publicly listed tract home builders that put up developments of hundreds and thousands of homes in a couple years do not use factory built homes. It is safe to assume they know how to optimize for construction costs, and evidently, hiring local construction crews and subcontractors is still the best way.
Hotels prefab the bathrooms typically, but not the rest of the room.
I wonder if it would work during wildfires.
There's no mass production, and we really need to ask why.