The Building Societies Association (BSA) said modern construction methods were a "world apart from the flimsy prefabs of post-war Britain" and the industry should be nurtured and grown as part of a radical re-think in how to boost housing supply.
It suggested that the culture of the UK's housing market, with expectations that a home should last for over a century, may be standing in the way of new building technologies being embraced.
The BSA called for a drive to improve the image of properties built by modern methods, which it said could provide high quality, affordable homes at a faster and less costly rate than was currently possible.
It said new building technologies meant large parts of a property, including whole rooms such as kitchens and bathrooms, could be constructed in a factory environment instead of directly on site, and then installed into the structure of a building. And that this could help more carefully control costs and work was unaffected by unpredictable weather.
Greater reliance on such technology could also help to tackle skills shortages such as bricklaying in the construction industry and cause less disruption for residents near building sites, the report argued.
Energy saving features could also make such buildings cheaper to run.
The report suggested the UK could look to countries like Japan and Germany for inspiration.
It said: "It is essential that home buyers are encouraged to recognise the value of emerging technologies and be willing to engage with them.
"This is a shared responsibility for all the industries involved in house building and housing policy."
It said expectations in housing markets around the world "appear quite different to those in the UK" - particularly in countries where modern methods of construction were more common.
The report said: "None of these markets have an expectation that a property will last for a hundred years-plus, as we do in the UK.
"This cultural difference could explain why the UK has been slower to embrace new technologies."
It said that in Japan, the focus was on the value of the site of the house, with a presumption that the house itself would be replaced each generation.
The report continued: "Offsite housing in Germany has a good image, being associated with a high quality of construction."
It said that both home buyers and mortgage lenders had confidence in bricks, which "have been used in construction for thousands of years and are proven to have stood the test of time."
BSA chairman Dick Jenkins said: "We have to explore radical solutions to solve the housing crisis.
"To get there, we rely on government to lead the way and break the cycle in relation to new construction technologies.
"At present, supply is so low that lenders can't routinely lend on these properties because they don't fully understand the risks, and builders won't build more of this type of home because mortgage lending is in limited supply as is home insurance.
"For the sake of consumers, these types of building technology must become as conventional and mainstream as brick and block has been for the past 100 years.
"If we do, it could be a game-changer."
To help valuers and lenders understand the different types of modern construction methods available, standardised terms should be used and more information should be provided through an online hub, the report suggested, alongside guidance from the Royal Institution of Chartered Surveyors (Rics).
TV presenter and architect George Clarke also backed modern construction methods, saying: "The house building industry is still stuck in the dark ages compared with other industries such as the automotive industry, the aviation industry and telecommunications.
"Offsite home manufacturing is the only way we are going to build the number of homes we need, that are affordable and of a quality that is acceptable for future generations."
Richard Bacon, chairman of the All Party Parliamentary Group on Self-Build, Custom and Community Housebuilding and Placemaking said: "Bespoke houses which cost almost nothing to heat and that are made-to-measure for each customer, configured on a laptop and then delivered within weeks - erected on serviced plots with the broadband, water, electricity and gas already in place - are a reality now, but not yet at scale."
Housing and Planning Minister Gavin Barwell said: "I welcome this timely report on boosting the use of innovative construction methods, with things like offsite construction providing a huge opportunity to increase housing supply.
"The £3bn Home Building Fund will help build more than 225,000 new homes and provide loans for small firms, custom builders, offsite construction and essential infrastructure, creating thousands of new jobs in the process."