HUD rescinds energy rule for new construction, opening market to more FHA, USDA buyers

U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner said the agency is rescinding energy-efficiency requirements tied to loans backed by the Federal Housing Administration (FHA) and U.S. Department of Agriculture (USDA), announcing the move Tuesday at HousingWire’s The Gathering in Austin.

A 2024 rule under the Biden administration had made new homes ineligible for FHA or USDAmortgages unless they complied with the 2021 International Energy Conservation Code (IECC), which imposed stricter building standards.

The rollback will initially apply to new construction.

“If a home was to receive an FHA or USDA mortgage, it was deemed ineligible if it did not comply with the IECC,” Turner said. “Today, I am rescinding this onerous rule because it literally can bring an increase of $20,000 to $31,000 per single family project.” 

Turner added that while proponents argued the upfront costs would be offset over time, the payback period could be decades. According to him, the average price of a home in some areas is $300,000, but the median price is $400,000.

“During the Biden administration, they said: ‘Well, these upfront costs will be able to be recovered. But what they didn’t revise, or didn’t say, is that it is going to take 90 years to do that,” he added.

Editor’s note: This is a developing story and will be updated with more information.