HUD and USDA Rescind 2021 Energy Code Requirement for FHA and USDA Loan Programs

HUD and USDA announced this week that they are rescinding a 2024 rule requiring new homes purchased with FHA or USDA loans to meet the 2021 edition of the International Energy Conservation Code (IECC), a more stringent standard than what was previously required. The action does not eliminate energy efficiency requirements for these loan programs, but reverts them to the prior standard. The agencies cited affordability as the driving rationale, noting that compliance with the 2021 edition of the IECC would have added an estimated $20,000 to $31,000 to the cost of a new home.

Federal housing agencies are required by law to periodically update their energy efficiency standards to align with new IECC editions. The 2021 edition became the applicable benchmark for FHA and USDA programs in 2024. Amid industry concerns over its cost impact, HUD and USDA suspended enforcement of the rule in 2025 and invited stakeholder comment to help inform the agencies' review.

NAR submitted comments urging HUD and USDA to reconsider mandatory code requirements and instead support voluntary approaches that promote energy efficiency without suppressing housing production. "Eliminating or streamlining burdensome regulations in the housing ecosystem, particularly when it comes to building and development, is key to supporting access to housing and homeownership," wrote 2025 President Kevin Sears. "While NAR believes building high-performing energy efficient and quality homes nationwide is necessary to address the supply crisis, we are encouraged by the agencies’ desire and efforts to provide builders with the most flexibility in meeting energy efficiency measures."