New-home efficiency rule gets the axe

The U.S. Department of Housing and Urban Development (HUD) and the Department of Agriculture last week rescinded a rule that would have required certain newly built homes to meet stricter energy efficiency standards. 

Catch up quick: A rule finalized in 2024 under the Biden administration rendered all new-construction homes ineligible for FHA or USDA-backed mortgage loans unless they were built according to the 2021 International Energy Conservation Code (IECC). 

• It would have required that gas furnaces and heat pumps meet certain energy efficiency standards, and also included requirements for duct sealing and air leakage. 

What’s happening: The National Association of Home Builders (NAHB) and 15 state attorneys general sued, and a federal court in March vacated the standards. 

• Last week’s announcement by HUD and the USDA officially rescinds the 2024 Final Determination in its entirety.  

What they’re saying: “Research shows that adopting these standards could have added between $9,600 and $21,400 to the price of a new home, depending on the climate zone,” Bill Owens, chairman of NAHB, said in a statement. 

Yes, but: At least five states — California, Washington State, Vermont, New Jersey, and Connecticut — have adopted the 2021 IECC or its equivalent.