In late April the U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Agriculture (USDA) published final energy efficiency standards for new home construction. The new standards, mandatory for all HUD- and USDA-financed single-family construction housing, require that buildings meet the 2021 International Energy Conservation Code (IECC) and that HUD-financed multifamily housing be built to 2021 IECC or ASHRAE 90.1-2019.

Reactions to the announcement have been mixed. Officials for the National Association of Home Builders (NAHB) suggest the new regulations will “curb new construction and harm housing affordability nationwide.” Officials argue that, “without adequate review and consideration of how it will affect home buyers or renters, HUD and USDA have rammed through a mandate that will do little to curb overall energy use but will exacerbate the housing affordability crisis and hurt the nation’s most vulnerable house hunters and renters.”

The Rocky Mountain Institute (RMI), an independent, nonpartisan, nonprofit, takes a more neutral stance, pointing out that “the refreshed standards will impact up to a quarter of all new homes nationwide and will cut energy bills by up to a third, paying for the efficiency improvements within two years on average.”

RMI focused on the reach of the new standards and how many would be affected, pointing out that “most homes built today do not need to comply with the 2021-era codes.” A report from RMI noted that only six states have codes comparable to the new standard. “This update from HUD and USDA will raise the bar and save energy for affordable homes in the other 44 states.”

However, bringing everyone up to the new standard will come at a cost. In reaction to the new standards, NAHB officials say that bringing those remaining 44 states—and more specifically the different jurisdictions within them—up to the new code “will lead to a host of logistical and implementation challenges in the field and will require bringing a third-party to manage the compliance process.”

NAHB officials further stated that, “studies have shown that building to the 2021 IECC can add up to $31,000 to the price of a new home and take up to 90 years for a home buyer to realize a payback on the added cost of the home.”

The association believes “this unreasonable trade-off for a new home buyer will do little to offer meaningful energy savings for residential homes and apartments and in fact, will make older, less efficient homes more attractive.”

Yet the trade-off might be worth it, RMI officials suggest. According to RMI, “[b]etween FHA- and USDA-supported mortgages and HUD-supported affordable housing, the new rule could apply to one in four new homes, ensuring countless more families receive the economic and resilience benefits of energy efficiency.”

In areas of the country where summer heat can be a health hazard, improved energy-efficiency could potentially make the difference between life and death, officials suggest.

“The updated standard will help prevent high bills during hot weather — and, critically, will protect families from heat waves. For example, a study by three national laboratories and the US Department of Energy (DOE) estimated that during a 7-day heat wave and power outage in Houston, Texas, a house built to the 2021 IECC would stay at safe temperature and humidity levels for the entire week, while a typical house would only remain safe for four days. Bringing Houston’s housing stock up to the newly finalized HUD-USDA standards, would prevent about 80 percent of heat wave-related deaths,” an RMI report states.

The benefits aren’t contained to the Southeastern states; the RMI notes that “Households are projected to save over $18,000 on their housing and energy bills over a 30-year mortgage in several northerly and mountainous states,” and that, “[t]he new standards also reduce risks from extreme cold: for example, the DOE study suggests that Minneapolis residents would be safe for about twice as long during a cold-snap outage in homes built to the updated standards compared with the average Minneapolis house.”

That may be the best-case-scenario. Officials from the NAHB aren’t sure it’s a realistic expectation.

“The Biden-Harris administration has set a goal of building an additional 2 million homes and this new policy runs completely counter to that objective,” says NAHB chairperson Carl Harris. “HUD and USDA are supposed to help the most vulnerable home buyers and renters — not price them out of the housing market. This senseless nationwide codes mandate will significantly raise housing costs — particularly in the price-sensitive entry-level market for starter homes and affordable rental properties — and limit access to mortgage financing while providing little benefit to new home buyers and renters.”

The silver lining the NAHB came away with is that upon it’s urging—and that of commenters—HUD extended the compliance dates for the new requirements. The effective date of the rule is May 28, 2024, but multifamily projects have 12 months to get on board; single-family homes have 18 months to come into compliance, and homes in “persistent poverty rural areas” have two years before they have to meet the new standards.

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