In May 2024, the US Departments of Agriculture (USDA) and Housing and Urban Development (HUD) updated their minimum home energy standards for new construction. This is great news because residents in new homes that these agencies support will soon benefit from lower bills, greater resilience to extremely hot and cold weather, and all-around more comfortable and healthier living spaces.
Multifamily homes like HUD-funded apartments and condos purchased with Federal Housing Administration (FHA) mortgages will be among those affected: new covered buildings under four stories will need to comply with the 2021 International Energy Conservation Code (2021 IECC), while taller buildings must meet ASHRAE/ANSI Standard 90.1-2019 (90.1-2019). HUD and USDA estimate that over 40,000 new apartments will be affected every year.
This month, the Federal Housing Finance Agency (FHFA) is considering a similar move as regulator and conservator of the Government Sponsored Enterprises (GSEs), including Fannie Mae and Freddie Mac. While best known for their support of single-family home mortgages, the GSEs collectively back about 40% of outstanding debt on US multifamily properties. A change of policy from FHFA would likely affect hundreds of thousands of new apartments annually.
Between the HUD-USDA standard and a potential FHFA decision soon, updated energy standards are poised to make a big impact on higher density housing. The combination of updated efficiency standards and incentives for new apartment buildings will create win-wins for residents, developers, and the climate that affects all of us.