HUD, USDA defend rule NAHB argues will hike housing costs

The Trump administration is defending new building standards that over a dozen states and a leading industry trade group say will  markedly raise housing costs.

A federal judge this week scheduled a hearing which could determine the fate of the lawsuit over the adoption of energy efficiency standards a decade in the making. The Department of Housing and Urban Development and the U.S. Department of Agriculture are asking the court for summary judgment, or to toss the lawsuit which was filed in the final days of the Biden administration.

The National Association of Home Builders and 15 state attorneys general argue the new rules would suppress production of lower-priced homes eligible for Federal Housing Administration and USDA-insured mortgages. The NAHB also suggests the new building codes could add up to $31,000 to the cost of building a new home.

Feds' opposition to the complaint comes despite HUD in March postponing some of the construction compliance dates in question by six months, part of the Trump administration's review of numerous existing policies. 

Housing regulators have so far largely followed through on President Trump's deregulatory push, but HUD has clung onto some old fights, such as a dispute over appraisal guidance with Rocket Cos.  

Neither attorneys nor representatives for the parties responded to requests for comment Friday.

The new building rules lean on standards from the 2021 International Energy Conservation Code and the 2019 American Society of Heating, Refrigerating and Air-Conditioning Engineers code. HUD and USDA said average single-family borrowers could see net savings of $15,000 over the life of a 30-year loan under the new code.

In a 39-page motion for summary judgment this week, the government described its lengthy analysis and the multiple opportunities it afforded for public comment, to which NAHB had responded. 

A Department of Justice attorney accused plaintiffs of taking feds' remarks out of context, such as a finding that the rules would eventually reduce the pool of homes for FHA buyers by 0.2%. HUD and USDA said they offered that figure as a worst-case scenario which didn't account for positive impacts of energy efficiency. 

"Plaintiffs' quotations cherry-pick unfavorable sounding language, ignore that those quotes were just a part of the analysis, and ignores the bigger picture and clear conclusions to the contrary," wrote counsel for HUD and the USDA.

The government also disputes plaintiffs' Administrative Procedure Act claim, and rejects their challenge that feds are barred from further rulemaking under a 1990 federal housing act. The regulators say they're permitted to make subsequent code updates despite an earlier "Final Determination" regarding building rules in 2015.

The sides are set to debate the motions for dismissal and summary judgment July 9 in a Tyler, Texas federal courthouse. 

HUD Secretary Scott Turner has pushed the agency to cut red tape across the department, including rescinding the Affirmatively Furthering Fair Housing Rule and slashing vendor contracts worth over $100 million. The regulator is also seeking a $33 billion reduction in funding in the upcoming federal budget debate.

The moves have been criticized by numerous stakeholders, including local elected officials who this week encouraged lawmakers not to divert the burden of affordable housing funding onto states and municipalities.