Housing Affordability — The Sticker Price Doesn't Tell the Whole Story
The U.S. Department of Energy is reviewing how it evaluates the cost-effectiveness of building energy codes, and the debate has largely focused on one number: what it costs to build a home. But that's only one small piece of the equation. The more important number is what it costs to own one.
As DOE reconsiders its analytical framework, the Energy Efficient Codes Coalition (EECC) — representing companies and organizations committed to long-term housing affordability — is urging the agency to keep both sides of that ledger. Here's why.
Energy Productivity Is an Economic Imperative
The U.S. is entering a period of unprecedented electricity demand growth, driven by manufacturing, AI, and data centers. Grid Strategies projects the country will need roughly 128 additional gigawatts of generating capacity by 2029 — a 15.8 percent jump in energy demand (Grid Strategies, 2024).
Meeting that demand requires more generation and more energy productivity, making better use of the energy we already generate. Efficiency isn't an alternative to energy production — it's a force multiplier. Every unit of energy a building doesn't waste is a unit available for other economic uses. DOE should weigh these grid-reliability and economic benefits when it evaluates building energy codes, not just the upfront construction math.
Codes Aren't What's Driving the Affordability Crisis
Today's housing affordability problem has real, well-documented causes: elevated mortgage rates, rising land and development costs, labor shortages, and restrictive zoning. Over the past two decades, homebuilders have also shifted away from entry-level homes toward larger, higher-margin construction — shrinking the starter-home supply and pushing up average new-home prices.
Energy codes are a comparatively small piece of that story. HUD's own 2024 determination found that the incremental cost of complying with the federal minimum energy standard (2021 IECC) was about $3,087 above the prior code — under 1 percent of the median FHA-financed new home (HUD, 2024). That code is projected to deliver national average energy savings of roughly 8.66 percent (DOE, Federal Register, 2021). Even under the homebuilding industry's own considerably higher estimate — about $22,572 — code compliance is still only around 5 percent of the current $424,900 median new-home price (U.S. Census Bureau & HUD, 2026).
It's also worth remembering — energy codes apply only to new construction. Most first-time buyers purchase existing homes built under far older standards. The real affordability problem isn't that new homes are too efficient — it's that too few new homes are being built for entry-level buyers at all.
Updated codes don't appear to be constraining supply, either. In the five largest states that adopted the 2021 IECC, single-family permitting kept pace with national trends before and after the code took effect, with more than 250,000 new single-family homes built or permitted since (ACEEE, 2025).
We're also aware of NAHB's June 2026 estimate that $131,734 in total government-imposed regulatory costs sit on the price of a new home, including more than $40,000 attributed to "changes in building codes over the past 10 years" (NAHB / Eye On Housing, 2026). That figure shouldn't be conflated with the cost of the current energy code. It bundles a full decade of changes across every code discipline — structural, fire, electrical, accessibility, and energy — based on a self-reported survey of 54 land developers and 337 builders, not an engineering-based analysis. HUD's determination, by contrast, isolated the current energy code specifically using engineering methods, arriving at a figure that is a small fraction of NAHB's decade-spanning estimate. DOE should lean on code-specific engineering analysis, not aggregate survey data spanning unrelated code cycles and disciplines.
Affordability Has to Be Measured Over the Life of the Home
Homes routinely last 60 years or more. Building envelope improvements — insulation and air sealing — generally last for the life of the structure, while lighting, appliances, and mechanical systems get replaced several times over that span. That distinction matters economically: durable envelope investments keep generating savings for decades with little to no maintenance or replacement cost, while equipment and other systems often carry regular maintenance and replacement expense. A well-built envelope also often shrinks the size and therefore costs of the mechanical equipment needed in the first place. Even for existing homes, DOE recommends (DOE Home Energy Rebates Program Guidance) that homes be properly insulated and air sealed before considering other HVAC related updates in order to help ensure that maximum savings and benefits are achieved.
Because roughly 80 percent of buyers finance their purchase, and 90 percent of those choose a 30-year mortgage, mortgage cash-flow analysis is one of the most honest ways to evaluate what code changes actually cost homeowners. At the current 30-year fixed rate of 6.43 percent (Freddie Mac PMMS, July 2026), financing HUD's $3,087 incremental cost adds about $19 to a monthly mortgage payment. DOE and PNNL analyses have found that this cost is typically recouped within the first year of ownership through lower utility bills once financing is properly factored in (ICC, summarizing DOE/PNNL analysis). A $19 monthly cost tied to an envelope that doesn’t need replacing compares favorably to the cost of equipment that needs to be replaced every 10 to 20 years — a distinction that simple, first-year-only payback analysis misses entirely. DOE's own analysis found energy codes would save $43.7 billion in energy costs from 2010–2030, and nearly $90 billion through 2040 (U.S. DOE, Impacts of Modern Building Energy Codes, at iv, Dec. 2024).
And those savings don't stop with the first owner. Efficiency investments pay dividends to every subsequent owner of a home; inefficient construction passes its added costs down the chain instead. DOE should prioritize methodologies — mortgage cash-flow analysis and properly structured life-cycle cost analysis — that capture this full picture, rather than simple payback methods that undervalue durable, long-lived measures relative to shorter-lived systems and equipment.
Improve the Framework — Don't Discard It
We recognize the legitimate concerns raised during recent model energy code cycles about efforts to use the code as a vehicle for broader policy goals around electrification, decarbonization, and fuel choice. We share those concerns that stretch the energy code beyond its traditional mission of improving building energy performance.
But the right response to that overreach is not to weaken or abandon energy conservation measures that have delivered real, measurable savings to homeowners for decades. It's to restore discipline to the code development process — keeping updates focused on cost-effective performance improvements and leaving broader energy policy questions to elected policymakers.
Every presidential administration since the 1970s has supported energy efficiency in buildings. That's a rare, five-decade run of bipartisan continuity. Walking away from it now, based on incomplete cost analysis, risks creating the very affordability problems this review is meant to solve.
The Bottom Line
Cost-effective building energy efficiency isn't primarily an environmental issue — it's an economic one. It strengthens the grid, lowers energy costs for homeowners, and reduces pressure on taxpayer funded federal energy assistance programs, including the $4.015 billion appropriated for LIHEAP in FY2026 (HHS / American Public Power Association).
DOE has an opportunity to build on 50 years of bipartisan progress with an analytical framework that reflects the complete economics of homeownership — not just what it costs to build a house, but what it costs, and saves, to live in one.
The Energy Efficient Codes Coalition (EECC) supports energy efficiency policy and could use your help. Sign up to be an Ally today at www.energyefficientcodes.org
All the best,
Amy Schmidt
Executive Director
Energy Efficient Codes Coalition
The Energy Efficient Codes Coalition (EECC) represents companies and organizations committed to home affordability across the full useful life of the home. This piece is adapted from EECC's comments submitted to the U.S. Department of Energy in response to Docket No. EERE-2026-BT-BC-0034.