The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) announced the adoption of the updated minimum energy standards for new single and multifamily homes on Thursday. News homes can now only receive USDA and HUD-insured mortgages if they are built to the 2021 International Energy Conservation Code (IECC).

As a result of the updated energy standards, energy efficiency improvements of 37% will cut energy costs by more than $950 per year, HUD said, saving homeowners tens-of-thousands of dollars over the lifetime of a new home. The upfront costs of the energy efficiency improvements can be rolled into a FHA mortgage. And in new multifamily housing that is four stories and above, these standards save households $224 per apartment per year.

“The most cost-effective moment to invest in common sense energy efficiency is when you’re building a new home. These updates don’t just benefit the residents of these homes. They benefit us all by reducing carbon emissions that lead to climate change," said Marion McFadden, principal deputy assistant secretary for community planning and development at HUD.

The standards rely on insulation, air sealing, and efficient windows, lighting, and heating and cooling systems to lower monthly energy bills. 

The International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART) issued the following statement:

“The common-sense rule finalized today by the U.S. Department of Housing and Urban Development and the Department of Agriculture is a win for families, communities and SMART members nationwide. Energy efficiency standards on new housing will save money for working Americans and benefit our environment — and SMART sheet metal workers are the skilled and certified professionals who can get the job done. All of us at SMART applaud this rule, and we look forward to taking on the jobs it will create.”

The National Association of Home Builders (NAHB) issued the following statement:

“Studies have shown that building to the 2021 IECC can add up to $31,000 to the price of a new home and take up to 90 years for a home buyer to realize a payback on the added cost of the home. This unreasonable trade-off for a new home buyer will do little to offer meaningful energy savings for residential homes and apartments," said Carl Harris, chairman of the NAHB and a custom home builder from Wichita, Kan.

“The Biden administration has set a goal of building an additional 2 million homes and this new rule runs completely counter to that objective," Harris added. "This senseless 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.”