Builders Challenge Michigan’s First New Home Codes in a Decade Over Cost Concerns

LANSING, MI — Two major construction industry groups in Michigan have filed lawsuits aiming to block the implementation of the state’s first update to residential homebuilding codes in over a decade. The new rules, set to take effect August 29, focus on increased energy efficiency and long-term cost savings for homeowners. But builders argue the upfront expenses are too burdensome and may worsen the state’s housing affordability crisis.

“Michigan faces a housing crunch. Too few homes are available. And too few homes are affordable, especially for first-time homebuyers entering the market,” the Home Builders Association of Michigan and the Michigan Manufactured Housing Association stated in their suits, filed June 20 and June 23 against the Michigan Department of Licensing and Regulatory Affairs (LARA) and its director, Marlon Brown.

The legal challenges come as the state attempts to replace outdated codes based on 2015 international standards with ones rooted in 2021 updates—some of the most stringent energy standards issued in years. Builders had previously warned they would take legal action, and now they’ve followed through, targeting both the general residential codes and specific energy-efficiency provisions.

“These lawsuits are another roadblock on the way,” said Carlee Knott, energy and climate policy manager with the Michigan Environmental Council, a vocal supporter of the update.

The new regulations cover design and materials like insulation, windows, and HVAC systems. Federal analyses suggest these could save homeowners nearly $400 per year on utility bills. Yet an expert report submitted by the builders claims the added cost for a typical 2,000-square-foot home would be $16,000.

At the heart of the dispute is whether the new codes comply with a provision in Michigan law requiring that updates be “cost-effective” over a seven-year period. Builders argue the state ignored this legal requirement, saying the payback period stretches well beyond seven years. “Although the Governor has recognized the need for more and diverse homebuilding in Michigan, the State of Michigan through LARA has chosen to adopt two new Codes that frustrate that objective,” one suit states.

A federal study contradicts the builders’ findings, estimating payback within 10 to 12 years and positive monthly cashflow for homeowners in as few as two years. “It ends up saving people money in the long run, just by having those more energy efficient appliances and better insulation,” Knott said. “Those savings add up quickly and pay for themselves over the lifetime of that mortgage.”

Builders counter that the state failed to account for broader housing affordability concerns. Citing a market study, they argue that every $1,000 added to construction costs prices out nearly 5,300 Michigan families from homeownership. They also assert that members are already incurring financial harm as they prepare for code compliance, purchasing new manuals, redesigning homes, and ordering different materials.

The lawsuits are currently pending before Judge James Robert Redford in the Michigan Court of Claims. A preliminary injunction has been requested to pause implementation, and a final ruling could either validate or halt the codes.

Knott said the Environmental Council is considering legal intervention in support of the state. “Whether this satisfies the requirements of Michigan law, or whether the builders’ argument will hold up is a question for the courts,” she said. “It is open to interpretation.”

If successful, the lawsuits could delay Michigan’s code modernization even further—possibly by years. “That kind of just freezes Michigan in having decade-old codes for even longer, and I think it creates a lot of uncertainty too for builders,” Knott warned.

As of June 26, LARA had not yet filed a formal response in court.

• Climate Goals: The energy code update is aligned with broader efforts in Michigan to meet climate goals and reduce building-sector emissions, one of the largest contributors to carbon pollution.
• Precedent: Similar lawsuits have stalled code updates in other states. In Michigan, past legal actions have delayed residential code reform for years.
• Housing Affordability Tension: The legal dispute illustrates the growing tension between environmental goals and housing affordability. While energy-efficient homes can save money over time, higher construction costs pose immediate challenges for low- to middle-income buyers.
• Code Implementation Challenges: Even without legal delays, builders face a steep learning curve adjusting to new standards, requiring training, design changes, and supply chain adaptations.

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Originally reported by M Live.