The U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture have announced a rollback of energy efficiency requirements for certain residential construction projects, a move aimed at reducing costs and accelerating housing development.
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The decision rescinds mandates tied to the 2021 International Energy Conservation Code (IECC), which federal officials said added significant costs to new home construction and limited access to government-backed financing for projects that failed to comply.
According to administration estimates, the standards increased the cost of building a new home by roughly $20,000, depending on location and climate zone.
The National Association of Home Builders (NAHB) welcomed the rollback, arguing that the policy change will help improve housing affordability and increase supply.
“By repealing this onerous mandate, the Trump administration is making it easier for builders to construct more housing supply at an attainable price for Americans,” NAHB Chair Bill Owens said in a statement.
The administration has emphasized reducing regulatory barriers as part of a broader strategy to address the nation’s housing shortage, which officials say amounts to millions of units.
Federal officials also noted that compliance with the IECC requirements could add between $9,600 and $21,400 to the cost of a new home, depending on regional conditions — costs that developers say are often passed on to buyers.
The rollback follows legal challenges and broader market pressures affecting the housing sector. In March, the U.S. District Court for the Eastern District of Texas blocked enforcement of the federal standard after a lawsuit filed by NAHB and a coalition of 15 states.
“Compliance with the rule would have placed significant new cost pressures on home builders and multifamily developers, making it harder to deliver the affordable, attainable communities that are urgently needed,” Owens said.
The policy shift comes amid rising home prices and declining affordability across the United States. National median home prices reached record highs in 2025, while the number of first-time homebuyers dropped to historic lows.
Local governments have increasingly explored zoning reforms, building code adjustments and other regulatory changes to boost housing supply and address affordability challenges.
The rollback underscores an ongoing policy debate between reducing construction costs and maintaining energy efficiency and sustainability standards in residential development.
Originally reported by Ryan Kushner, Editor in Smart Cities Dive.
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