Yesterday, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) announced a final rule updating the energy code requirements for HUD and USDA new home mortgages. All new construction homes purchased with these federal mortgages must now comply with the 2021 or the 2024 International Energy Conservation Code (IECC). While the final rule was announced today, enforcement of the rule will not come for 18 months. Currently, the rules require compliance with the 2009 IECC. This new requirement will increase the energy efficiency of new homes by more than 30 percent.

The move will help U.S. homeowners by lowering their energy costs, especially for lower-income households, which spend 8 percent on average for home energy costs, compared with a national average of around 3 percent. More than 165,000 single and multi-family homes per year would be subject to the new requirement.

The average consumer savings as a result of this change is $963 annually. The move will also increase home resilience, the agencies say.

The notice of the final rule satisfies a 2007 law that requires both HUD and USDA to periodically adopt the latest building energy efficiency codes. Federal agencies have been out of compliance since 2015. Thus, this increase is significant since it represents a big boost in terms of code editions and energy savings.

The adoption of these new, more stringent energy codes is part of a wider Biden Administration effort to achieve decarbonization goals and lower consumer costs.