- HUD and USDA to rescind stricter energy-efficiency standards for new homes.
- Agencies claim prior rules raised construction costs by $20K–$31K per unit.
- Rollback aims to lower housing costs and accelerate new supply.
- Biden-era standards had tied loan eligibility to 2021 energy code compliance.
Agencies Move to Change Course
The US Department of Housing and Urban Development and Department of Agriculture announced plans to roll back energy-efficiency building requirements, reports Bisnow. These rules, introduced in 2024 under the Biden administration, mandated that new homes meet the 2021 International Energy Conservation Code to qualify for FHA or USDA-backed mortgage loans.
Cost Impacts and Supply Focus
HUD and USDA argue the energy-efficiency standards raised the cost of each new home by at least $20K. Some estimates place the increase as high as $31K. They say this added burden slowed housing production and reduced affordability for first-time buyers, echoing broader concerns that stricter energy requirements could further push development costs higher and reshape project feasibility across multifamily markets. They also point to longer permitting and inspection timelines as a key factor.
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Regulatory Shift and Broader Efforts
The rollback of energy-efficiency standards follows recent executive orders to ease development restrictions and boost mortgage lending. The administration aims to ramp up housing starts as the White House estimates a nationwide shortfall of 10M units. More legislative changes are under consideration, including the Road to Housing Act, which targets the build-to-rent sector.
What’s Next
Industry groups expect the removal of energy-efficiency mandates to accelerate production of new homes, though some advocates for sustainability warn of potential long-term environmental impacts. The debate continues as policymakers weigh easing regulatory barriers against efficiency goals.
