The U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture announced the rollback of a 2024 policy that required new homes financed through FHA and USDA-backed loans to comply with the 2021 International Energy Conservation Code (IECC). The agencies said the requirement significantly increased construction costs and created additional regulatory hurdles for builders.
According to federal estimates, compliance with the 2021 IECC added between $20,000 and $31,000 to the cost of a new home, making it more difficult for first-time buyers to enter the housing market. Officials also said the mandate contributed to slower construction timelines, more complex permitting and reduced housing supply in some areas.
Secretary Scott Turner said rescinding the rule removes a major barrier to affordability and supports efforts to expand homeownership. Secretary Brooke Rollins added that reducing regulatory burdens is especially important for rural communities, where rising costs can limit access to new housing developments.
The decision follows a broader federal review that included public comments and stakeholder feedback, as well as a recent ruling from the U.S. District Court for the Eastern District of Texas, which found the previous policy could reduce housing availability. HUD had previously delayed implementation deadlines, including an extension pushing compliance requirements to the end of 2026.
With the rescission now in place, FHA- and USDA-backed loan programs will revert to earlier energy efficiency standards that were in effect prior to the 2024 determination. Officials say the change is expected to streamline construction processes, reduce upfront costs for builders and buyers and help increase the supply of new homes across the country.