New federal energy efficiency rules are facing legal challenges, with critics arguing they will significantly increase the cost of new homes and exacerbate an already severe housing shortage.
The housing market is already strained, with the median sales price of a home reaching nearly insurmountable levels for many Americans. Now, new federal energy efficiency rules threaten to exacerbate the affordability crisis. The National Association of Home Builders (NAHB) and 15 Republican-led state attorneys general have filed a lawsuit challenging these rules, arguing they will significantly increase the cost of a new home.
While the goal of the regulations is to reduce utility costs and benefit the environment by requiring better insulation, tighter air sealing, energy-efficient windows, mandatory ventilation systems, and efficient lighting, opponents contend these changes come with a steep price tag that will disproportionately impact low-income buyers, effectively shutting them out of the market. Critics also warn that the rules will discourage builders from constructing new homes, deepening an already acute housing shortage that has plagued the nation.The Brookings Institution, a D.C.-based think tank, analyzed data from 2023 and found the gap between housing supply and demand has widened significantly since the mid-2000s. Their estimates, based on household sizes, housing costs, and demographic trends, underscore the urgency of addressing this shortage. Adding to the pressure on homebuyers is the persistent high cost of mortgages. Despite recent interest rate cuts by the Federal Reserve, mortgage rates have remained stubbornly high. Rates for a 30-year fixed mortgage surpassed 7% last week, the highest since May of last year. Experts explain that broader economic factors are at play, making it difficult to bring mortgage rates down considerably.While mortgage rates today are higher than they were during recent years—such as 2020 and 2021 when they hovered around record lows—they are relatively moderate in a historical context. In 1984, for example, the average 30-year mortgage rate was close to 14%. Back then, home prices were significantly lower, averaging $97,000. Median family incomes were $26,000, and the overall cost of living was much lower, according to the Department of Housing and Urban Development and Bureau of Labor Statistics. While the market today is vastly different, the combination of high home prices and elevated mortgage rates continues to challenge buyers, keeping affordability a distant dream for many
Housing Affordability Energy Efficiency Mortgage Rates Homebuilding Housing Shortage
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