WASHINGTON, D.C. — A federal policy change will allow more newly built homes to qualify for government-backed mortgages, after officials rescinded an energy standard they say raised construction costs and limited affordability.
What This Means for You
- New homes may cost less to build and buy
- More properties could qualify for FHA and USDA loans
- Builders will no longer be required to meet a stricter energy code
The Departments of Housing and Urban Development and Agriculture announced they are rescinding a 2024 policy that required new homes to meet the 2021 International Energy Conservation Code to qualify for certain federally backed loans.
The energy code is a national building standard that sets requirements for insulation, windows, and energy efficiency features in homes. Under the previous rule, homes that did not meet that standard were ineligible for loans backed by the Federal Housing Administration or USDA rural housing programs.
Cost and Supply Concerns
Federal officials said the requirement increased construction costs by an estimated $20,000 to $31,000 per home, making it harder for first-time buyers to afford new housing.
They also said the rule contributed to delays in construction timelines and reduced the number of new homes being built.
“By rescinding this mandate, we are removing a significant regulatory barrier that added tens of thousands of dollars to the cost of a new home,” said Housing Secretary Scott Turner.
Agriculture Secretary Brooke Rollins said the change is intended to support housing development, particularly in rural areas.
Policy Background
The 2024 determination had required nationwide adoption of the 2021 energy code for homes financed through federal programs, even though only a limited number of states had implemented the standard.
The administration had already delayed compliance deadlines, including an extension issued in February 2026 pushing implementation to the end of the year.
Following a review of public comments and policy impacts, federal agencies issued a joint determination rescinding the rule entirely.
Legal Context
Officials said the decision aligns with a recent ruling from a federal court in Texas, which found the earlier policy could reduce housing availability.
Neutrality Check
Supporters of the rollback argue it lowers costs and increases housing supply. Critics of similar policy changes have previously argued that stricter energy standards reduce long-term utility costs and improve environmental outcomes. No opposing statements were included in the provided material.
Next Steps
Federal housing programs will revert to the energy efficiency standards that were in place before the 2024 rule.
Officials said the change is intended to streamline construction and expand access to homeownership.
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