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Home builders warn energy codes, flood and other rules are raising construction costs
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Summary
Buddy Hughes of the National Association of Home Builders told the House Small Business Committee that recent federal proposals and energy codes have contributed substantial increases to the price of new homes and constrained housing supply, while urging more small‑business input into rulemaking.
Buddy Hughes, representing the National Association of Home Builders (NAHB), told the House Small Business Committee that regulatory costs are a major driver of rising home prices and constrained supply.
Hughes said roughly 25% of the price of newly built single-family homes and 41% of apartment development costs are attributable to regulations, and he cited the 2021 International Energy Conservation Code (IECC 2021 or "ICC 21" referenced in testimony) and certain HUD and USDA rules as examples of agency actions that can increase per‑unit costs. "That investigation also pointed to potential pads to reform and strengthen the 45 year old law which we support," Hughes said when discussing consistent small-business input under the Regulatory Flexibility Act and past committee findings.
Specific regulations discussed at the hearing included a HUD/USDA energy standard the witness said could add more than $30,000 per unit in some cases; a proposed federal heat standard (committee testimony identified the Occupational Safety and Health Administration as the responsible agency for workplace heat standards); and HUD's Federal Flood Risk Management Standard (FFRMS), which the witness said could expand floodplain requirements and affect FHA insurance eligibility for single-family and multifamily projects.
Hughes urged targeted congressional action to prevent rulemaking that would impose unrealistic or one‑size‑fits‑all mandates on small builders and called for stronger enforcement of the Regulatory Flexibility Act so agencies fully analyze impacts on small entities. He also said agencies sometimes certify that proposed rules would not have significant impacts on small entities and thus skip parts of the RFA compliance process — a determination NAHB called "counterintuitive."
Why it matters: NAHB and builders told the committee that energy and stormwater codes, impact fees and other regulatory costs reduce lot supply and make first‑time homeownership harder, and that added engineering and permitting costs for small subdivisions can be especially onerous.
Committee response: Members from both parties raised concerns about costs, with Republicans citing immediate relief options and Democrats urging a balanced approach to protect safety, quality and environmental goals. The committee said it intends to review specific agency rules and to consider legislation that increases small-business input in rulemaking.
Ending: The hearing did not result in formal agency decisions; members asked for written submissions and promised follow‑up oversight of HUD, USDA and other agencies on code implementation and compliance with RFA requirements.
