August 17, 2026
Robin Yochum, Buildings Program Director
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In June 2026, the U.S. Department of Energy (DOE) released a new analysis1 with a striking claim: nationwide adoption of the 2024 International Energy Conservation Code (IECC) would add more than $127 billion annually to residential construction costs, including as much as $14,000 to the cost of a new single-family home. The DOE described the code as a “costly mandate” that “excessively raises the upfront cost of building or purchasing a home,” and tied it to what administration officials have labeled “Green New Scam” policies.2
But the DOE’s own technical record drastically contradicts these claims and tells a different story. In fact, this new analysis by the DOE is a complete reversal from over two decades of determining that energy codes are cost-effective.
A cost-effectiveness analysis published in January 2025 by Pacific Northwest National Laboratory (PNNL), the DOE’s own lab, found that the 2024 IECC would deliver estimated average life-cycle savings of $2,954 per dwelling compared with the 2021 IECC. It estimated a national average incremental construction cost of just $282 for a single-family home and found that homeowners would achieve cumulative positive cash flow in approximately one year.3
How can analyses associated with the same department produce such dramatically different results?
The answer begins with the baseline. PNNL evaluated the changes between the 2021 and 2024 editions of the IECC, whereas DOE’s new analysis compares the 2024 code with requirements dating back to 2006. The analyses are therefore not answering the same question. And given that an overwhelming majority of U.S. cities and states have adopted the 2009 or newer4 as of this writing, these latest cost claims are largely irrelevant.
They also appear to emphasize different measures of affordability. PNNL’s established methodology considers incremental construction costs, mortgage financing, energy savings, and total life-cycle costs. The DOE’s new announcement departs dramatically from the methodology, instead emphasizing the cumulative construction cost of moving from much older requirements to the 2024 code.
Unfortunately under this new analysis, the DOE has not adequately explained how its new assumptions, baseline, and analytical framing relates to the cost-effectiveness methodology and technical findings it has relied upon for decades. This new analysis deserves scrutiny.
The DOE’s technical record
In December 2024, the DOE issued its formal determination on the 2024 IECC, as required when a new model energy code is published. That determination found that the residential provisions of the 2024 IECC would deliver approximately a 6.6% energy-cost savings nationally compared with the 2021 edition.5
PNNL subsequently evaluated the construction costs and consumer economics associated with those changes. Its analysis found the 2024 IECC to be cost-effective across all climate zones when compared with the 2021 code.
The national weighted averages included:
- $2,954 in life-cycle cost savings per dwelling
- A 2.5-year simple payback period
- $144 in net consumer cash-flow savings during the first year
- Cumulative positive cash flow in approximately one year
PNNL also makes clear that life-cycle cost, not simple payback, is the DOE’s primary metric for determining cost-effectiveness. Life-cycle analysis reflects how homes are commonly financed and accounts for costs and savings over a 30-year period.
The DOE’s June 2026 announcement contradicts years of its own cost effectiveness studies and analyses. It claims that adopting the 2024 IECC nationwide would increase construction costs by more than $127 billion annually compared with 2006 code levels. It also emphasizes simple payback periods exceeding 10 years in most states and 20 years in some.
A comparison with 2006 requirements will naturally produce a larger cumulative cost than a comparison with the immediately preceding code. But it should also account transparently for nearly two decades of energy savings, changes in equipment and construction practices, and the long-term financial value delivered to homeowners. Without that full accounting, the headline construction-cost figure provides an incomplete picture of affordability.
Why simple payback tells an incomplete story
A payback period exceeding 10 years can sound alarming if it suggests that a homebuyer must write a $14,000 check and then wait decades to recover the investment. But that is not how most Americans purchase homes.
Most homebuyers finance their purchase through a mortgage rather than paying the full construction cost upfront. The more relevant question for many buyers is whether the additional monthly mortgage expense is greater or less than the monthly energy savings.
PNNL’s cash-flow analysis addresses that question. It assumes a 30-year fixed-rate mortgage and evaluates the costs and benefits experienced by a homeowner over time. Compared with the 2021 IECC, it found positive annual cash flow beginning in the first year in every climate zone and cumulative positive cash flow within zero to two years.
Simple payback can still be a useful metric, but it does not account for real-life financing, mortgage interest treatment, fuel-price escalation, replacement costs, or the remaining value of efficiency measures at the end of the analysis period. PNNL explicitly notes that simple payback is reported for informational purposes and is not the DOE’s primary measure of cost-effectiveness.
If the DOE intends to give simple payback greater weight in its future decisions, it should explain why — and what that change means for homeowners who experience housing costs as a combination of mortgage payments, utility bills, maintenance, and long-term value.
Why better codes cost less than people assume
At face value, the intuition behind the DOE’s argument is easy to understand. More insulation, better windows, and tighter construction can add costs to a project. But an efficient building envelope also reduces the amount of heating and cooling a home requires, which can allow builders to install smaller, less expensive HVAC equipment and can save on monthly utility bills for residents. Newer code provisions also reduce costs by providing more flexible compliance options or replacing previous requirements with more cost-effective alternatives. PNNL’s analysis accounts for both increases and decreases in construction costs associated with the 2024 IECC. It found that the newer code requires additional investment in some climate zones but reduces construction costs in others.
This does not mean every code provision is free. It means that estimating the cost of a code requires evaluating the complete package, not simply adding the price of every efficiency improvement without also accounting for avoided equipment costs, design tradeoffs, and operating savings.
A June 2026 analysis by ICF provides another useful comparison.6 Unlike PNNL’s analysis of the incremental changes between the 2021 and 2024 IECC, ICF examined the cumulative construction costs of moving from the 2009 to the 2024 code — an older baseline that more closely resembles the framing of the DOE’s new analysis.
For a 1,562-square-foot starter home, ICF estimated median incremental costs ranging from approximately $2,700 to $7,800, depending on climate zone, foundation type, and whether the home uses gas or electric equipment. Its broader range extended from approximately $2,600 to $8,600. Although the baselines and assumptions are not identical, even ICF’s upper estimate is substantially below DOE’s claim of as much as $14,000 for a new single-family home.
ICF’s analysis is limited to construction costs and does not evaluate utility savings, mortgage cash flow, or life-cycle cost-effectiveness. It also notes that some of its estimates may overstate actual costs because standard construction practices already exceed the assumed baseline in some markets.
The ICF study does not settle the debate, but it reinforces the central point: code-cost estimates depend heavily on the baseline, building assumptions, compliance pathway, regional practices, and treatment of offsetting savings. A headline figure has little meaning without that context.
What actual construction trends tell us
The building industry has long claimed that stronger energy codes increase housing costs, discourage construction, and price potential buyers out of the market. Given the nation’s serious housing-affordability challenges, those concerns deserve careful examination. They should also be tested against actual outcomes.
A 2026 University of Alabama study of 45 code adoptions across 26 states over more than a decade found no consistent relationship between code updates and home prices, and where prices moved at all, decreases were more common than increases. In another study, ACEEE (American Council for an Energy-Efficient Economy) examined permitting activity in states that adopted the 2021 IECC and found no clear evidence that adoption caused new-home permitting to diverge from national trends for either single-family or multifamily construction.7 Those findings in and of themselves do not prove that codes have no effect on individual projects, as costs and implementation challenges vary significantly by climate, market, construction type, and local workforce capacity. But they do challenge the assumption that stronger energy codes automatically increase housing costs or produce a measurable decline in overall housing construction.
This is precisely why transparent data matters. Surveys of builder perceptions, modeled cost estimates, and real-world permitting data can all contribute useful information, but they measure different things. None should be presented as definitive without acknowledging its limitations.
Codes are only one small part of the housing-cost story
Energy codes can marginally affect construction costs, but they are only one piece of a much larger housing-affordability problem. Land prices, zoning restrictions, permitting delays, interest rates, labor shortages, material costs, tariffs, infrastructure requirements, and consumer preferences for certain amenities and designs, all affect what gets built and what buyers ultimately pay. These pressures vary widely among states and communities, which is one reason a single national headline figure can obscure more than it reveals.
Energy codes also affect costs after a buyer moves in. Utility bills are part of the monthly cost of housing, just as surely as mortgage payments, property taxes, and insurance. A less expensive home is not necessarily more affordable over time if it exposes its occupants to higher and more volatile energy expenses. Affordability analyses should therefore consider both sides of the equation: the cost to construct the home and the cost to own and operate it. Construction costs are a one-time occurrence, but we expect our new houses to still be lived in 100 years from now.
Treating energy codes as the primary cause of rising housing prices is factually incorrect,8 and risks distracting policymakers from the larger and more difficult structural problems constraining housing supply. At the same time, we should never dismiss legitimate implementation concerns or assume that every provision will be cost-effective in every location. Both positions require better data, not broad generalizations.
What is actually at stake
The DOE’s determinations and technical analyses are more than talking points. States and local governments rely on them when deciding whether to adopt newer energy codes and how those codes should be amended to reflect local conditions. Those decisions shape how millions of homes will perform for decades.
The DOE has now presented a national construction-cost estimate based on a materially different baseline and framing from its established cost-effectiveness analyses. At a minimum, that creates an obligation for the DOE to reconcile the new narrative with the Department’s previous findings.
The DOE should publish a transparent, apples-to-apples analysis showing:
- Which provisions are included in each estimate
- How incremental construction costs were calculated
- How cost reductions and equipment tradeoffs were treated
- Which housing types and construction projections were used
- How mortgage financing and consumer cash flow were considered
- How energy savings and life-cycle benefits were valued
- Why the 2006 code was selected as the principal baseline
- How the new conclusions relate to the DOE’s December 2024 determination
The DOE issued a Request for Information (RFI) in May seeking feedback on its methodology for evaluating the affordability and cost-effectiveness of building energy codes.9 That public-comment period closed August 3, 2026 with 169 comments submitted.
The timing makes transparency especially important. The DOE should use the RFI process to explain what has changed, respond to technical concerns, and ensure that future analyses give decision-makers a complete accounting of both costs and benefits.
The honest position is not that every code provision is cost-free or appropriate in every climate — but overall, codes have a long, well-documented history of saving homeowners and renters money and improving the health, comfort, and resiliency of new homes. States and communities should evaluate local construction practices, workforce capacity, energy prices, and consumer impacts. Code developers should simplify compliance, offer flexible pathways, and improve the quality of their cost data. Builders should have a meaningful role in identifying requirements that are difficult or expensive to implement. But those decisions must be data-driven and rest on complete and consistent analysis. Upfront construction costs are real. So are utility and insurance bills — and residents pay those bills for as long as the house stands.
- The DOE’s June 2026 Analysis https://www.energycodes.gov/impacts
↩︎ - “Energy Department Analysis Finds Proposed International Building Codes Would Cost Americans $9.2 Billion Annually” Energy.gov, June 26, 2026 https://www.energy.gov/articles/energy-department-analysis-finds-proposed-international-building-codes-would-cost ↩︎
- Salcido V.R., Y. Chen, Y. Xie, Y. Jung, F. Feng, C.A. Faulkner, and J. Xie. (2025). National Cost-Effectiveness of the Residential Provisions of the 2024 IECC. Richland, WA: Pacific Northwest National Laboratory. https://www.pnnl.gov/main/publications/external/technical_reports/PNNL-35986.pdf ↩︎
- Department of Energy. (2026, July 24). Status of State Energy Code Adoption. https://energycodes.gov/state-portal ↩︎
- “Energy Savings Analysis: 2024 IECC for Residential” (Determination TSD) energycodes.gov, Dec 2024 https://www.energycodes.gov/sites/default/files/2024-12/2024_IECC_Determination_TSD.pdf ↩︎
- Cost of energy efficiency changes in new housing: 2009 to 2015 or 2024 IECC.” (2026). https://insulationinstitute.org/wp-content/uploads/2026/07/071026-06a-IECC-Code-Cost-ICF-2026-06-30.pdf
↩︎ - “In States with Strengthened Building Energy Codes, A Quarter Million New Homes Rise” ACEEE, October 6, 2025 https://www.aceee.org/blog-post/2025/10/states-strengthened-building-energy-codes-quarter-million-new-homes-rise ↩︎
- Awondo, Sebastain and Crawford, Shane and Powell, Lawrence, “Do Housing Prices Change with Building Codes?” (June 07, 2026). Available at SSRN: https://ssrn.com/abstract=6896198 or http://dx.doi.org/10.2139/ssrn.6896198 ↩︎
- “Updating and Improving the Methodology for Assessing Affordability and Cost-Effectiveness of Building Energy Codes” Federal Register, May 4, 2026 https://www.federalregister.gov/documents/2026/05/04/2026-08646/updating-and-improving-the-methodology-for-assessing-affordability-and-cost-effectiveness-of ↩︎
