Looking at the Whole Picture!
Introduction
Providing affordable single-family and multiunit housing in the United States and Missouri is a major issue. Affordable is defined as requiring 30% or less of a household’s income. The U.S. Census Bureau reported the median household income in Missouri in 2023 was $68,500. Affordable housing costs are, therefore, up to $20,550 annually, or $1,712 a month.
There is currently a significant shortfall of housing for low- and middle-income families. For example, a recent study estimated a 64,000-unit housing shortfall in Kansas City.
What Makes Up Housing Costs in Missouri
There are two components to housing costs: the first dollar construction and the ongoing utility and maintenance costs over the life of the housing unit.
The cost of construction of new housing is affected by multiple forces, including:
- Zoning regulations regarding lot size and the number of units allowed
- “Overhead” costs associated with code reviews, approvals, profits, and fees
- Material costs, which are currently being affected by tariffs and other factors
- Labor costs
A 2025 study by the National Home Builders Association found that construction accounted for 64% of the cost of housing. Over a third of the costs are associated with site, general expenses, and profits.
Do Building Codes Affect Costs
Yes. Building codes are designed to protect the health and safety of occupants, covering structural, electrical, plumbing, and energy systems. These codes are carefully designed by national organizations, with input from multiple interest groups, including the American Institute of Architects and the National Association of Home Builders. Model codes are typically published in three-year cycles.
Each jurisdiction in Missouri adopts, and may modify, these model codes to match the needs in its community. This process takes a significant effort and time, with open input from individuals and organizations. For example, Kansas City took two and one-half years to adopt its current energy code.
Without building codes, Missouri residents would be subject to increased risk of building failures, personal harm related to electrical systems, high utility costs, and sanitation risks.
Currently, over 200 jurisdictions have adopted energy codes more current than the 2009 code. The most current energy code was published in 2024.
Why Are energy Codes Important?
Are Energy Code Costs a Significant Component of Housing Construction Costs?
Energy codes help protect us from unreasonable utility expenses. The U.S. Bureau of Labor Statistics reported in August 2024 that electricity costs rose by 5.5% over the recent 12-month period, and gas by 13.8%.
The mean age of a typical single-family house in Missouri is 43 years, incurring 516 monthly utility expenses. A 2025 study estimates that a family of three in a single-family home in Missouri spends $513 per month on utilities (electricity, gas, water, trash, and internet), $250 of which is for electricity and gas. $264,700 over the mean life for all utilities, $129,000 for electric and gas.
Reducing this energy burden is very important for low-income families. A high energy burden is defined as spending more than 6% of household income on utility bills, while a severe energy burden is over 10%. In St. Louis, the current rate is 6.9% for a family with a household earning of $35,000. A 2018 study reported by the Kansas City Star found the energy burden for low-income families in Kansas City was around 8.5% (the 9th highest in the United States). Statewide, thousands of families are falling behind. Ameren Missouri disconnected over 15,000 households in September 2024 and 17,000 in October. Statewide, more than 233,000 households were behind on utility bills.
Feedback on the application of new energy codes has helped reduce their impact on construction costs. A 2025 report from the National Association of Homebuilders found a $4-$6,000 construction cost saving for our region, comparing the 2024 code to the 2021 code. The U.S. Department of Energy concluded that the 2024 IECC will lower annual residential energy costs by 6.6% compared with the 2021 edition. Locking codes to a specific year would eliminate the upgrading of building strategies and potential cost savings. Reducing the demand for our electrical gridewill also become increasingly important as AI data centers place significant demands for energy.
Are Energy Code Costs a Significant Component of Housing Construction Costs?
Are Energy Code Costs a Significant Component of Housing Construction Costs?
Are Energy Code Costs a Significant Component of Housing Construction Costs?
No. For example, the average cost of a new home in the Kansas City region is over $400,000. The Metropolitan Energy Center estimates the cost of the 2021 code at $10,000 over earlier codes, an impact of about 2%.
The anticipated energy efficiency of a home built to 2021 energy codes compared to 2009 is 15-20%. Assuming an average energy cost increase of 5%, the estimated payback on this initial cost is 10 to 12 years. The 2024 code results in lower first-dollar costs than the 2021 code and an increased efficiency of 8%.
Do Older Energy Codes Help Provide Affordable Housing?
No. The older codes (such as 2009) would result in less efficient homes, increasing monthly utility costs. For example, the 2018 energy code is estimated to be 25-30% more efficient than the 2009 code. The 2024 codes provide even more efficiency gains.
Have adoption of current Energy Codes negatively affected housing starts?
Are Energy Code Costs a Significant Component of Housing Construction Costs?
Are Energy Code Costs a Significant Component of Housing Construction Costs?
No. Transitions to new building codes typically generate fluctuations in activity. For example, in Kansas City, the adoption of the 2021 Energy Code in late 2023 sparked a spike in permits immediately before the enforcement of the new code, followed by a drop, and then built back to prior typical levels of activity.
Do current Energy Codes have an impact on the economy?
What's in it for Missouri
Yes, the energy-efficiency sector continues to outpace the broader economy in job creation. Jobs in this sector include HVAC technicians, electricians, insulation contractors, energy auditors, and high-performance product manufacturers. Many of these are well-paid, local jobs that cannot be outsourced.
Manufacturers and distributors of energy-efficient products rely on strong codes to drive consistent demand. Rural counties with appliance and component manufacturers (e.g., windows, insulation, HVAC) stand to lose the most from efforts to weaken or restrict energy code adoption.
