The Department of Housing and Urban Development and Department of Agriculture are rescinding a Biden administration-era policy that they say added up to $31,000 to the cost of new homes.

President Joe Biden issued a final rule in 2024 that required newly constructed homes to abide by the 2021 International Energy Conservation Code, a standard which has only been deployed in a few states, in order to be eligible for an FHA- or USDA-backed mortgage, HUD Secretary Scott Turner and USDA Secretary Brooke Rollins said in a press release Tuesday. 

Enforcing the energy mandate nationwide would have increased home construction costs between $20,000 and $31,000, according to some estimates. It would have also decreased new-home production, complicated construction and expanded permitting and inspection timelines, the release said.

"By rescinding this mandate, we are removing a significant regulatory barrier that added tens of thousands of dollars to the cost of a new home," Turner said in the release. "The Trump Administration's focus is to facilitate new housing supply and ensure that every American family has a path to homeownership without being sidelined by bureaucratic red tape."

Separate research cited by the National Association of Homebuilders, which commended HUD and USDA on the change, found the standards could have added between $9,600 and $21,400 to the price of a new home depending on climate.

"Compliance with the rule would have placed significant new cost pressures on homebuilders and multifamily developers, making it harder to deliver the affordable, attainable communities that are urgently needed," NHAB Chairman Bill Owens said in a statement. "By repealing this onerous mandate, the Trump administration is making it easier for builders to construct more housing supply at an attainable price for Americans."

Developers, including D.R. Horton, Lennar Corp. and KB Home, missed expectations in last quarter's earnings, while the housing supply shortage in the United States hit 10 million, according to a report from White House economists released earlier this month.

New-home purchase originations hit a record high in March, though, surging 11% year over year, the Mortgage Bankers Association found.

"We appreciate the agencies' responsiveness to the concerns raised by our members about the real-world impact of this policy," MBA President and CEO Bob Broeksmit said. "This action reduces regulatory red tape that hinders new housing production and limits affordability, particularly for first-time and rural homebuyers."

Home-price growth has continued to flatten in 2026 and mortgage rates have come down as of late, setting up a more affordable second half of the spring homebuying season. Affordability hit its best level in four years in the beginning of the year before rates spiked due to the Iran war, ICE Mortgage Technology found.

Since taking office, the Trump administration has delayed the compliance date for the final rule. HUD extended the deadline in February for its programs until the end of the year. In July of last year, HUD and USDA issued a Request for Information to gain additional comment from stakeholders to help inform the agencies' review of the code.

The FHA and USDA loan programs will comply with the energy efficiency standard in effect prior to the final rule.

"Affordable rural housing is a top priority for the Trump Administration, and we are focused on removing all the unnecessary restrictions that artificially drive up new home prices," Rollins said in the release. "We launched the Rural Revival Agenda at USDA to bring rural communities to the forefront of our actions, and this joint determination restores common sense to our programs and ensures that we can continue bringing new affordable housing supply online for Americans."