HUD Drops Energy Code Rule, Builders Save Up to $31K
Real Estate News: Real Estate Investing Podcast
Kathy Fettke / RealWealth
4.5 • 546 Ratings
🗓️ 3 May 2026
⏱️ 3 minutes
🧾️ Download transcript
Summary
Could a major policy shift in Washington make housing more affordable and unlock new supply?
In this episode, Kathy Fettke breaks down a major move by the U.S. Department of Housing and Urban Development and the U.S. Department of Agriculture to roll back a 2024 building code requirement tied to FHA and USDA financing.
The agencies say the rule was adding as much as $20,000 to $31,000 to the cost of building a new home. Now that mandate has been rescinded.
What does this mean for homebuilders, first-time buyers, lenders, and real estate investors?
Kathy explores how this policy change could impact housing supply, build-to-rent opportunities, rural development, affordability, and the future of entry-level housing.
If you invest in real estate or follow housing policy, this is one update you will want on your radar.
🏠Want to learn more? Visit www.Newsforinvestors.com.
Source: https://www.hud.gov/news/hud-no-26-029
Transcript
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| 0:00.0 | A major policy shift out of Washington, it could lower the cost of building new homes and potentially |
| 0:05.7 | open the door to more housing supply. I'm Kathy Fetke and this is real estate news for investors. |
| 0:14.3 | This is Real Estate News with Kathy Fedke. The U.S. Department of Housing and Urban Development or HUD, along with the U.S. Department |
| 0:23.6 | of Agriculture, have officially rolled back a 24 building code requirement tied to FHA and USDA |
| 0:30.6 | financing. |
| 0:31.6 | The rule required newly built homes financed with FHA or USDA-backed loans to meet the 2021 International Energy Conservation |
| 0:40.3 | Code, also known as IECC. Now, that may sound technical, but the impact was very real. According to HUD, |
| 0:49.0 | builders estimated that the compliance with that code could add anywhere from $20,000 to as much as $31,000 to the cost of a new home. |
| 0:57.8 | And for first-time home buyers, that kind of added cost can make the difference between qualifying |
| 1:03.0 | and being priced out. The policy was originally finalized in April of 2024, but after industry |
| 1:10.1 | pushback, legal challenges, and a fresh review by the |
| 1:13.6 | agencies, HUD and USDA have now rescinded that determination in its entirety. The rescission |
| 1:20.6 | officially took effect today, May 1st, 2026, according to the Federal Register. That means Holmes |
| 1:27.4 | financed through FHA and USDA programs will now according to the Federal Register. That means homes financed through FHA and USDA programs |
| 1:30.2 | will now return to the energy standards that were in place before the 2024 rule. For builders, |
| 1:36.9 | this could mean fewer compliance hurdles, lower construction costs, and faster permitting in some |
| 1:42.6 | markets. For lenders, it could expand the pool of |
| 1:45.7 | newly built homes eligible for FHA and USDA financing. And for real estate investors, |
| 1:52.7 | especially those watching entry-level housing, build-to-rent, or rural development, this could help |
| 1:58.5 | unlock more inventory in markets where affordability has been |
| 2:02.2 | under pressure. Industry groups, including the Mortgage Bankers Association and the National |
| 2:06.7 | Association of Home Builders, have welcomed the move. They say lowering regulatory costs could |
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