Housing to Move Forward

“The industry, and products and services that are part of its ecosystem, has already evolved to meet current standards," said Kelly Hampton, chief brand officer at California-based homebuilder Neovi. "Going backwards creates misalignment, wastes prior investments and potentially reintroduces practices that no longer reflect how homes are designed, built or lived in today.”

She anticipates that states like California will not accept the reversal. However, when there isn’t a baseline standard to follow, there will be confusion, misalignment, industry fragmentation, and added cost.

“I’m a strong believer that energy codes are a mechanism to protect and enhance housing quality, resilience, comfort, and safety,” said Alyssa Watson, senior associate at ADL Ventures. “While some are making the argument that rescinding the energy code can reduce upfront construction costs, it’s a short-term and limited bandaid solution. Inefficient homes built to lower energy and quality standards shift costs to homeowners in the long term through higher utility bills, decreased performance, uncomfortable spaces, and, in some cases, negative health impacts.”

Other industries are pouncing on opportunities to add innovation and housing is building policy and a culture to avoid it any time it adds cost. But, a home is where someone lives, breathes, spends most of their time, and invests most of their money. It should be a top priority for innovation.

“Housing is the single largest investment a person can make,” Hampton said. “People do not want poor quality housing. Poorly built or inefficient homes cost more to maintain and depreciate rather than appreciate. High quality housing adds to the stability of communities and drives broader economic value.”

If the 2021 codes stayed in place, then industry stakeholders would collaborate for better solutions that could lower cost design and develop better products to meet codes and hopefully even go beyond code. That’s the direction that housing could be headed.

Housing Operational Costs

Home buyers have a lot of challenges in today’s market, from rising home insurance, higher property taxes, along with other rising costs from tariffs. All of these added together mean that more homeowners are at risk of foreclosure.

The Century Foundation reports that from March 2022 to June 2025, average monthly energy bills rose from $196 to $265—a 35% jump, or nearly three times overall inflation during that period. And, its data combined with the consumer price index shows that home energy prices are surging past other costs—the average household is seeing an increase of more than $800 for energy bills.

In 2023, Habitat for Humanity published a brief that shared research on the impact of poor performing homes on energy use. Inefficient homes mean that homeowners are spending more on energy—the three-year-old report stating that 70% of households with low incomes face a high energy burden, even spending more than 6% of their income on energy.

Because of the low quality of construction, these households actually spend nearly four times as much on household energy costs as households with higher incomes. Building higher quality homes would reduce greenhouse gas emissions along with being able to lower the household energy bill.

Habitat’s research showed that the way to strengthen energy efficiency is to weatherize and insulate homes and equip homes with energy-efficient systems, appliances and lighting to reduce energy costs. These smart practices are actually being eliminated by the building code requirements.

NAHB was fighting excessive government regulation on the cost of housing, which can certainly be justified, builders want to lower costs so that buyers can afford them and they can sell the homes. But that’s a cost first approach that isn’t a sustainable way to approach the industry. Housing as a large investment and as an economic driver needs a focus on quality, productivity, and efficiency.

The code was logical. It called for continuous exterior insulation to prevent thermal bridging or heat escape, higher insulation in ceilings and floors, better air sealing for lower air changes per hour, pre-wiring for electric vehicle charging and electric appliances, and better window performance.

Now with the code being eliminated, builders will be able to go to a lower standard, reverting to the 2018 or 2015 IECC, which will lower the sales price of the house, but it will mean higher ongoing operational costs for the homeowner. The newer code would produce homes that are about 9% to 12% more efficient than those built to the 2018 standard. So, that will mean that the heating and cooling needs to run longer and more often and the equipment lifespan will be shortened.

There also will be wasted energy, estimated at up to $400 annually lost in drafts and air leaks. This lower level building envelope also can lead to moisture buildup inside walls that causes rot or mold over time.

Again, there are upfront cost savings for building lower quality homes, but homeowners could have to make retrofits at a higher price. For instance, electrifying a home for an EV or heat pump costs up to four times more than installing those systems during the initial build.

Other Ways To Lower Housing Costs

“It is a false choice to suggest that we must sacrifice building performance to address the housing affordability and housing crisis,” Watson added. “Yes, we need to reduce costs, increase delivery speed, and expand housing supply, and there are other levers we can pull that do not require weakening the energy code to do so.”

Industrialized construction is a promising way to deliver higher-quality, higher-performing, healthier homes that are resilient, comfortable, durable, safe, and energy efficient. It can be used to standardize designs, optimize manufacturing and workforce productivity for timeline efficiencies to build more housing without sacrificing the protections provided by the energy code.

Hampton agrees that there are other approaches.

“Perhaps rather than focusing on something that is already set, looking at and simplifying the local bureaucracy and time involved to get things built would be the best use of time,” she offered.

Eric Werling, owner and principle consultant at Home Innovation Strategies agrees that focus should go to improving standards.

“The key way to reduce costs in the industry is by figuring out how to improve the standards so there is less confusion about what standards there are, making it easier for builders to understand and bring economies of scale,” he said. “Without the standards, we are making it harder for builders to develop new approaches that can improve economic efficiency.”

What This Means For The Future Of Housing

If housing regulation wants substandard, it means forcing people to live in substandard conditions, which creates a big wake. Lower quality housing means poor health. It means bad sleep. It means more energy use, which means more impact on the environment, which means more climate change at a faster rate.

“The goal should not be simply to build more homes,” Watson said. “It should be to build more homes that are affordable, healthy, resilient, and efficient - we need our energy codes to protect that baseline.”

The key to the future of housing will be about paving a path to innovation, not a constant route to the lowest cost.