Impact of New Energy Codes on Kansas City Home Costs and Local Housing Market Trends

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In a recent episode of the NAHB podcast 'Housing Developments,' CEO Jim Tobin and COO Paul Lopez discuss the economic factors impacting the housing market and NAHB's advocacy work in Washington, D.C. They note a 4.7% decrease in new home sales in April, continuing a year-long trend of decline despite early optimism.

The podcast also addresses the issue of housing affordability. According to the new NAHB/Wells Fargo Cost of Housing Index, a typical family now spends 38% of their income on a median-priced home, which is above the traditional affordability level. For lower-income families, housing costs can take up to 77% of their income. Additionally, over 22 million Americans are rent burdened, spending more than 30% of their income on rent.

The episode further explores how recent energy policies have affected housing affordability. NAHB member Shawn Woods, a builder from Blue Springs, Missouri, spoke to a House Subcommittee about the challenges caused by the 2021 IECC energy code in Kansas City. This code, adopted to qualify for funds from the Inflation Reduction Act, has increased the cost of new homes in the area by about $30,000.

Woods highlighted a significant difference in building permits between Kansas City, which adopted the new energy code, and surrounding counties that did not. Permit activity in these counties has increased by over 120%, compared to a 22% rise in Kansas City. This situation illustrates the unintended effects of policies on local housing markets.