Industrialization of house building has shifted the activities traditionally done at building site to the off-site assembly. The design, manufacturing processes and on-site assembly in industrialized house building are defined and documented to form a process platform, but these must be evaluated and improved to constantly develop better and more efficient practice. Lean production and philosophy are still not well understood concepts at the shop floor and wasteful activities that decrease production efficiency are often overseen. Current waste categorizations and descriptions seem not to be addressing problem areas and occurrence of waste in prefabrication of single family timber houses. The research aim is to define problem areas that occur during the prefabrication of wall modules, associate them to eight types of waste and identify key problem areas for possible development and improvement. The study was based on secondary data from five case studies that primarily focused on identifying and proposing possibilities for development of productivity. Four problem areas were identified and the future improvement efforts for the prefabrication of single family houses can be placed on developing the processes of the assembly system problem area. The possible future study can aim at quantifying these problem areas.