A rule that quietly shaped the economics of affordable new housing is gone. HUD and USDA rescinded the 2024 Final Determination that required new single-family and multifamily homes to meet the 2021 International Energy Conservation Code to qualify for FHA or USDA financing. The programs now revert to the energy standards that applied before the 2024 rule.
What the energy-code rule required
The rescinded determination tied federally backed mortgages to a stricter building-energy standard, the 2021 IECC and, for multifamily, ASHRAE 90.1. Builders and lenders argued the mandate added real cost to exactly the price-sensitive homes FHA and USDA loans are meant to reach. Estimates of that added cost ran from about $20,000 to $31,000 per home, depending on climate zone and design. The departments also scrapped a set of follow-on notices that had extended the rule’s effective dates.
Why builders and buyers are split
The trade-off is the usual one. Higher upfront cost buys lower utility bills over the life of the home, so efficiency advocates see the rescission as trading long-run savings for short-run affordability. Homebuilders and affordable-housing groups counter that a buyer priced out at closing never gets to enjoy the lower bills. With FHA and USDA loans concentrated among first-time and lower-income buyers, the affordability argument carried the day for this administration. Multifamily developers building for-rent product, from transit-adjacent towers like Alida in West Palm Beach to suburban garden apartments, watch these federal financing rules closely because they move the cost of capital.
HUD framed the move as a cost-cutting measure for new construction. Efficiency codes will keep advancing at the state and local level regardless, so the practical effect is a patchwork: what’s required depends heavily on where you build.