HUD and USDA Rescind 2024 Energy Code Requirement for New Housing

The U.S. Department of Housing and Urban Development (HUD), in coordination with the U.S. Department of Agriculture (USDA), has announced the rescission of a federal building code requirement tied to energy efficiency standards for new housing.

Under a 2024 policy, new homes financed with FHA or USDA-backed loans were required to meet the 2021 International Energy Conservation Code (IECC). According to HUD, this requirement increased construction costs by an estimated $20,000 to $31,000 per home and created additional challenges for developers navigating permitting and inspection timelines.

With this announcement, HUD and USDA are eliminating that requirement, allowing new homes financed through these programs to comply with the previous energy standards.

This policy shift reflects a broader focus on expanding housing supply by reducing regulatory barriers that may increase costs or delay construction. For many rural and affordable housing providers, particularly those working with USDA and FHA financing, the change may help improve project feasibility and support the development of additional housing units.

At the same time, the decision highlights an ongoing policy debate around balancing upfront construction costs with long-term energy efficiency and operating savings for homeowners.

Read more from the HUD Newsroom here