Sustainable development has been the focus of all major industries in the world, especially in the construction industry. As one of the sustainable construction modes, housing industrialization (HI) is now absorbing a growing number of attentions that lead the industry to go green. However, the implementation of HI in China is far from satisfactory due to its low economic efficiency. This paper attempts to improve the HI supply chain from a new perspective-transaction costs (TCs). First, it provides an objective understanding of status quo of HI in particular in China. Then, the study outlines the basis of TCs theories and supply chain management theory, compiling literature review of the application of TCs and supply chain management in other fields to states the feasibility of their application in HI area. A theoretical framework is developed to explain the relationships and overlaps among these three areas. Analysis of the state of research in application of TCs in HI supply chain management is expected to help optimized the governance structure of HI supply chain.@en