Multifamily Builders Sound the Alarm on New Energy Codes in Mortgage Programs

Codes and Standards
Published
Contact: Jessica Lynch
[email protected]
VP, Housing Finance
(202) 266-8401

Many multifamily housing developers are concerned about plans by the Biden administration to mandate all new homes to be built to the latest energy codes as a requirement for certain federal home loan programs, according to a new survey.

The Department of Housing and Urban Development (HUD) and Department of Agriculture (USDA) said earlier this year they would require all HUD- and USDA-financed new single-family construction housing to be built to the 2021 International Energy Conservation Code (IECC) and HUD-financed multifamily housing be built to 2021 IECC or ASHRAE 90.1-2019 standard, the commercial energy code used by larger multifamily buildings.

Like other model building codes, energy codes are released every three years, and states and municipalities adopt the codes on their own timelines, often making amendments to align the codes with local climate, geography, construction practices and other considerations. Most of the country has yet to adopt the 2021 IECC, effectively making HUD’s recent move a national mandate.

In its latest Multifamily Market Survey (MMS) of multifamily housing builders and developers, NAHB asked a series of special questions about the new energy code rules and the impact they will have on the market.

When asked about the impact the move will have on their development, 56% of respondents said that the rules would dissuade them from pursuing some projects due to higher costs. At a time when both presidential candidates are calling for more housing to be built, this policy will do the opposite by curtailing building.

Another 44% of respondents said that the requirement to follow the 2021 IECC/ASHRAE 90.1-2019 would cause them to charge higher rents. HUD said in its announcement of the new policy that the more onerous energy code would save home owners and renters money by lowering utility bills. But those savings will never materialize if rents are higher.

The new rule, which goes into effect for multifamily properties in May 2025, applies only to a narrow set of federal loan programs, which its proponents have used to downplay the broad impact of the mandate. But just 11% of survey respondents said that they already build in an area that has adopted the 2021 IECC, meaning a vast majority of developers will be building to new codes.

The Federal Housing Finance Agency (FHFA), the regulator and conservator of Fannie Mae and Freddie Mac, is also reviewing the policy for possible adoption in its single-family and multifamily mortgage programs.

When asked about the impact should Fannie and Freddie adopt the new energy code requirement, survey respondents were even more skeptical. Some 61% of respondents said it would discourage additional affordable housing projects, and 63% said it would discourage new market-rate projects. Most said they would charge higher rents and avoid certain projects, and many would be forced to seek other sources of financing, reduce the size of apartments or amenities, or take other actions.

NAHB is working with members of Congress on a bill that would negate the move by HUD and USDA. NAHB staff is also working with the FHFA to educate decision makers on the dire impact this new mandate will have on multifamily and single-family development.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Labor | Advocacy

Apr 24, 2026

Labor Department Proposes New Joint Employer Rule for Wage and Hour Enforcement

The Department of Labor (DOL) released the text of a proposed rule that would establish a nationwide standard for determining joint liability for under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act.

Advocacy

Apr 23, 2026

NAHB Applauds Lawmakers’ Push to Remove Harmful Mandate from Major Housing Package

In a letter signed by 76 representatives, the Real Estate Caucus and the Build America Caucus called on House Speaker Mike Johnson and Minority Leader Hakeem Jeffries to remove harmful provisions in the Senate-passed 21st Century ROAD to Housing Act that mandate the forced sale of single-family build-to-rent (BTR) housing.

View all

Latest Economic News

Economics

Apr 22, 2026

State-Level Employment Situation: February 2026

February’s labor market data point to a notable pullback in employment, with job losses concentrated across a majority of states and only modest gains elsewhere. While January showed solid momentum, February’s decline reflects emerging softness in hiring conditions, alongside uneven performance across the country.

Economics

Apr 21, 2026

Population Growth and Housing Supply Dynamics at the County Level in 2025

U.S. population growth slowed notably in the latest Vintage 2025 population estimates from the U.S. Census Bureau, with the nation expanding by just 0.5% in 2025, roughly half the pace of the prior year. The deceleration was primarily driven by a sharp decline in net international migration (NIM), which dropped from 2.7 million to 1.3 million, while natural change remained relatively stable.

Economics

Apr 20, 2026

Construction Workforce Shifts: Fewer Tradesmen, More White-Collar Jobs

The long-running shift in the construction labor force away from construction trades and toward management, business, and technical roles is ongoing and gaining momentum, according to NAHB’s analysis of the latest 2024 data from the American Community Survey (ACS).