The U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture announced the adoption of the updated Minimum Energy Standards—a Final Notice that applies only to new, affordable, single-family and multifamily housing construction built with federal financing or funding.
The agencies report that the congressionally mandated requirements will save residents an estimated $15,071 for single-family homes and $5,886 per multifamily unit over 30 years, net of costs (compared to homes under existing U.S. requirements). Currently, lower-income households spend on average 8% of their income on energy, compared to a national average of 3%, according to HUD. The agency also estimates the updated rule will touch about 150,000 new units per year, with residents of single-family homes saving an average of $963 every year per household on energy costs, or $73 million in aggregate.
Federal response to the update
"Many people have been caught by surprise when utility costs spike. Families should never have to find themselves making hard choices about whether to heat their home in winter or use cooling during a heat wave," says Marion McFadden, principal deputy assistant secretary for Community Planning and Development, HUD. "The most cost-effective moment to invest in energy efficiency is when you're building a new home."
"Housing is an essential foundation for upward financial mobility and helps address issues related to economic inequality. People everywhere deserve to benefit from affordable energy costs in the places they call home that they can invest back into their families, businesses and communities," says Basil Gooden, rural development under secretary, USDA. "This announcement marks a step towards building more energy-efficient homes for people in rural areas, which is a step that enables us to build a better future for all."
Background
The Minimum Energy Standards update is not a new White House regulation, but a statutory requirement under the Congressional bipartisan Energy Independence and Security Act of 2007, which requires both HUD and USDA to jointly adopt the latest energy efficiency standards for new houses and multifamily units—about 180,000 annually—contingent on a determination that they will not negatively impact the affordability and availability of the covered homes. The notice directs HUD and USDA to update their requirements every three years. The energy efficiency codes and standards referred to are the the International Energy Conservation Code (for houses and low-rise multifamily buildings) and ASHRAE Standard 90.1-2019 (for high-rise multifamily buildings).
The standards update covers new housing purchased with federally backed loans such as Federal Housing Administration and USDA mortgages, along with new homes with funding from other HUD programs. New homes with mortgages purchased by Fannie Mae or Freddie Mac do not currently have such efficiency requirements or meet the Minimum Energy Standards, according to the Federal Housing Finance Agency.
NAHB statement
Carl Harris, chairman of the National Association of Home Builders, issued a statement on the notice, stating that it amounts to a nationwide codes mandate that will negatively affect U.S. housing affordability.
"Without adequate review and consideration of how it will affect home buyers or renters, HUD and USDA have rammed through a rule that will do little to curb overall energy use in the U.S. but will exacerbate the housing affordability crisis. 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. This unreasonable trade-off for a new home buyer will do little to offer meaningful energy savings for residential homes and apartments.
"The Biden administration has set a goal of building an additional two million homes and this new rule runs completely counter to that objective. HUD and USDA are meant 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."
USGBC statement
The U.S. Green Building Council joined advocates and industry groups in welcoming the final notice, stating that it will reduce housing costs, default risks to lenders, and greenhouse gas emissions and other pollution.
"This decision clears the way for billions of dollars in savings for the households that need it most, savings that will be delivered month after month, year after year, in the form of lower energy bills," says Ben Evans, federal legislative director, USGBC. "Additionally, these homes will be more comfortable and more resilient in the face of increasingly severe weather. This is going to improve a lot of people's lives, and the Biden administration, Sec. Todman and Sec. Vilsack deserve credit for their leadership in making it happen."
