New Homes: Affordable AND Energy Efficient

Cost of Efficient Construction Falls Under $1,000 Per Home

Meeting the current energy efficiency building code adds a mere $818.72 on average to the construction costs of a new home, reports a recent study by the Building Codes Assistance Project (BCAP), a nonprofit advocacy organization that supports code adoption and implementation.

Homeowners will be able to recoup those extra dollars in less than three and a half years, thanks to the annual energy savings of $243.37 per home. If the additional $818.72 is spread over the life of a 30-year mortgage, the rewards will come even quicker.

That scenario considerably shortens the payback period. For instance, in the state of Kentucky, the payback period is only seven months. In that state, a home built to the new code increases a 20 percent down payment by a modest $154.78 and the monthly mortgage payment by a negligible $3.01, BCAP found.  With a 10 percent down payment, the extra up-front investment is made up in only four months, due to lower home energy bills.

BCAP based these calculations on the national average new home price of $267,451 for a 2,400-square foot home and a 4.14 percent mortgage interest rate.  State-specific labor and product costs were also used so the study would mirror actual construction pricing as closely as possible.

How Energy-Efficient Rewards are Calculated

When a home is built to conform to the 2009 IECC (International Energy Conservation Code), which BCAP describes as a minimum but meaningful baseline for energy efficiency, home buyers get energy-efficient lighting and windows, a higher grade of insulation and HVAC duct sealing and testing.

“Throughout our research, we made sure to use real-world construction cost data and always tried to be as conservative as possible with our methodology,” noted BCAP Executive Director Aleisha Khan. “For example, even though many states already require duct testing, we added in $350 to the up-front cost of the energy-efficient home, because we know that in some states it doesn’t actually happen. 

Benefits of Building Energy Efficiency from the Ground Up

Because a home is usually an individual or family’s biggest lifetime investment, it makes sense to protect and maximize the value of that investment by building efficiently from the ground up and reaping lower energy bills from day one, Khan said. 

“While homeowners can always improve their homes’ energy efficiency, it’s far more cost-effective to upgrade building components during construction, rather than make costly and inconvenient retrofits later on,” Khan concluded.

The complete incremental cost analysis can be found on BCAP’s best practice network, the O.C.E.A.N. website.