Rush to Build New Homes to 2021 IECC Exacerbates Affordability Crisis, NAHB Tells Congress

The recent federal push to require certain new homes to meet the stringent energy efficiency requirements of the 2021 International Energy Conservation Code (IECC) and ASHRAE 90.1-2019 will price many would-be home buyers and renters out of the market and give them no choice but to stay in older, less efficient homes, the National Association of Home Builders (NAHB) told Congress today.

Testifying on behalf of NAHB before a House energy subcommittee, Shawn Woods, a home builder from Blue Springs, Mo., said the negative consequences of implementing a restrictive, costly national energy code, with no consideration for local conditions, outweigh the minimal improvements to energy efficiency and is a misguided effort.

"Without adequate review or consideration of how it will affect home buyers or renters, HUD and USDA have rammed though a mandate that will require new single-family construction financed through both agencies to be built to the 2021 IECC," said Woods. "This mandate will do little to curb overall energy use but will exacerbate the housing affordability crisis and hurt the nation's most vulnerable house hunters."

Studies have shown that building to the 2021 IECC can add as much as $31,000 to the price of a new home and that it would require up to 90 years for a home buyer to realize a payback on the added upfront cost. That's not a reasonable trade-off for a new home buyer.

"At a time when a lack of attainable, affordable housing in the single-family and multifamily markets is the main factor driving the housing affordability crisis, the government should be supporting sensible policies to facilitate homeownership and increase the supply of quality, rental housing," said Woods.

Woods added that not only does this mandate prohibit jurisdictions from adopting amendments to the energy code to accommodate local conditions and cost-effectiveness concerns, it also creates confusion and will result in longer permitting and construction times and lower housing production.

"HUD and USDA are supposed to help the most vulnerable home buyers and renters - not price them out of the housing market," said Woods. "This 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."

Even more concerning, Federal Housing Finance Agency Director Sandra Thompson has confirmed that her agency is considering applying the same standards recently adopted by HUD and USDA for new homes and apartments financed by Fannie Mae and Freddie Mac.

"Fannie Mae and Freddie Mac provide 72% of the financing for new home purchases," said Woods. "If Fannie and Freddie were forced to comply with the 2021 IECC mandate, this would become a de facto national standard and be a massive blow to housing affordability."

Meanwhile, Woods noted that policymakers are largely ignoring the existing housing stock - 130 million homes out of the nation's 137 million that were built before modern building codes took effect in 2010.

"Older homes are less energy efficient than new homes, they were not built to the stringent requirements contained in modern codes and often have less insulation and inefficient heating and air conditioning systems," said Woods. "To meet our national energy efficiency goals, retrofitting the existing building stock will be necessary."

According to the National Renewable Energy Laboratory, upgrades to the existing housing stock could yield a projected reduction of 5.7% of the total annual U.S. electricity consumption in 2030.

"Mandating the 2021 IECC and ASHRAE 90.1-2019 will act as a drag on housing production and this will have a domino effect on the rest of the economy, with fewer jobs and housing options, higher housing costs and a lower tax base."

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