Undue Regulations Hurt Housing Affordability, NAHB Tells Congress

In a congressional hearing today examining the effects of Department of Energy (DOE) regulations on America’s job creators, the National Association of Home Builders (NAHB) told lawmakers how burdensome DOE regulations are exacerbating the housing affordability crisis and impeding the ability of builders to increase the production of quality, affordable housing.

Testifying before the House Small Business Committee, NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala., said that residential construction is one of the most heavily regulated industries in the country.

“Government policies and regulations are making it harder and harder for home builders and multifamily developers to build housing that is affordable,” said Huey.

She then noted three examples of how excessive regulations originating from the DOE worsen housing affordability:

• Transformer standards. Soaring costs and shortages of electrical distribution transformers are delaying housing projects across the nation at a time when the DOE is seeking to minimally increase the energy efficiency standards for these products by a mere one-tenth of a percentage point, even though the agency already mandates distribution transformers be manufactured to very high efficiency standards. The DOE proposal would force manufacturers to retool production lines to produce new transformers and worsen the historic 18-to-24-month backlog that is hampering development across the country and raising housing costs.
  
  “Therefore, NAHB supports H.R. 4167, the Protecting America’s Distribution Transformer Supply Chain Act,” said Huey. “The legislation would prohibit the secretary of energy from changing energy conservation standards for distribution transformers for a period five years, which will allow time for the market to stabilize so that manufacturers can catch up with demand.”

• Electrification and gas stoves. Electrification mandates can be costly and infeasible in some areas of the country and create challenges for builders, home owners and consumers. A study conducted by the Home Innovation Research Labs in 2021 found that the additional up-front cost to build an all-electric house (as compared to a house with natural gas equipment and appliances) ranged from $3,832-$15,100 depending on climate zone.
  
  Meanwhile, DOE’s currently proposed rule, Energy Conservation Standards for Consumer Conventional Cooking Products, would ban the sale of most current gas cooktop models sold in the United States. More than 187 million Americans currently use natural gas appliances, saving them an average of $1,068 each year. The proposed rule would force manufacturers to retool their appliance production lines, drastically limit the availability of gas stoves across the country, and result in appliance production delays that would raise consumer costs for both electric and gas stoves in the coming years. NAHB remains committed to promoting energy choices for consumers.

• Building energy codes. The Inflation Reduction Act included $1 billion in grants to state and local governments to adopt updated energy codes that are more costly and restrictive, such as the 2021 International Energy Conservation Code (IECC). Adoption of the 2021 IECC can add as much as $31,000 to the price of a new home. NAHB understands the importance of energy efficiency, but the savings from the 2021 IECC can take a home owner as long as 90 years to see a payback. That’s not a reasonable trade-off.

“If we want to make a difference on energy efficiency, we must focus on existing housing, particularly older homes built before the introduction of modern energy codes,” said Huey.

According to the National Renewable Energy Laboratory, upgrades to the existing housing stock could yield a projected reduction of 5.7% of the total annual U.S. electricity consumption in 2030. Given this potential, NAHB believes that upgrading the existing housing stock must be the primary focus if the nation is to make measurable progress.

“Improving the nation’s housing supply and easing housing affordability challenges will take a coordinated and concerted effort all levels of government,” said Huey. “Let’s begin by fixing the broken regulatory process. Congress should pass legislation such as H.R. 358, the Small Business Regulatory Flexibility Improvement Act, to ensure that all regulations are designed with small businesses in mind, that regulatory rulemaking agencies are required to consider the true cost of regulations on small businesses, and that regulatory rulemaking agencies comply with the letter and intent of the law in crafting new regulations.”