Massachusetts Energy Codes are Compatible With Increasing Housing Supply

The following blog is reposted from Passive House Massachusetts. It explores the impact of the Massachusetts Specialized Opt-In Stretch Code on the housing supply. You can read the original post here. It was written by Passive House Massachusetts Executive Director Alexander Gard-Murray.

Summary: Massachusetts’ energy codes have not been a barrier to increased housing production in the state. On average, communities with stronger codes have seen stronger housing production.

• Specialized code communities have added new housing 17% faster than Stretch code communities, and Stretch code communities in turn have added new housing 14% faster than base code communities.
• Communities that have recently adopted the Specialized code have seen a median 25% increase in units added and 14% increase in units permitted in the year after implementation, compared with the previous year.

Many communities are choosing to adopt stronger codes

In 2023, Massachusetts’ voluntary Stretch energy code was updated with more rigorous requirements to cut energy use in buildings. Alongside this update, the state also introduced the Specialized opt-in code, a new option that cities and towns could voluntarily choose to adopt to further encourage high-performance building. Among other changes, the Specialized code requires large multifamily residential buildings (those above 12,000 square feet) to meet the “Passive House” standard (Phius or other passive building certifications).

These voluntary code options have been popular with Massachusetts communities. As of January 1, 2026, 301 cities and towns (representing 92% of the state’s population) have adopted the Stretch energy code. And since December 2022, 56 cities and towns (representing 32% of the state’s population) have gone further and chosen to adopt the Specialized opt-in energy code as well.

Housing growth has been faster where codes are stronger

The Stretch and Specialized codes are critical tools for improving energy affordability in the Commonwealth. But if they came at the expense of new housing construction, we might be concerned about the impact on housing affordability overall (as housing supply is critical to ensuring housing affordability). Fortunately, the updated Stretch and new Specialized code have now been in effect for long enough that we can start to examine their effect on housing production in the state.

To assess housing production, we use the U.S. Census Bureau’s Address Count Listing Files (ACLF). This dataset records the number of unique residential addresses within each census block, based on the U.S. Postal Service’s delivery routes. The first such data were made available in 2020, and since 2023 they have been released biannually. By matching census blocks to cities and towns, we can find out how many housing units exist in each community. We subtract the total number of units present in the last period from the total number of units in the current period to get the net number of new units added in each community. We interpolate the difference between measurements to see how many units were added (on average) each month. One advantage of this dataset is that it reflects actual housing units (rather than possible units). Another advantage is that it accounts for units removed from the housing stock (e.g. through demolition for new projects).

Since the Specialized code started going into effect, these Census data show that Specialized code communities have added 17% more housing units on average than Stretch code communities, and Stretch code communities have added 14% more housing units on average than Base code communities. These data present no evidence of a decline in housing production in Stretch and Specialized code communities.

There are limitations to these data. These are based on aggregate housing additions across communities with each different code. So they cannot tell us whether a few communities with especially strong (or weak) housing production are increasing (or lowering) the average for their group. Also, we might wonder whether the especially strong performance of Specialized code communities is driven by pre-existing factors. Perhaps communities with healthy housing production are more likely to adopt the Specialized code.

After implementing the Specialized code, communities build and permit more housing

To get at this, we can look at additions in each community in the year before and after the Specialized code was adopted. Basic factors like demographics, buildable land, and transit links are likely to stay relatively steady over this period. But we know that in the middle of this period the code status of these communities changes.

We take the average number of units added per 100,000 people over the 12 months after the Specialized code’s implementation date and divide it by the same average over the 12 months before the implementation date. When we do this, the median change in units added was an increase of 25% (using the median instead of the mean is important to avoid a few projects in small communities dominating the results — if we used the mean instead of the median the increase would be 301%). In other words, the median community added 25% more units per 100,000 people in the year after the Specialized code went into effect than it did in the year before.

There are still some limits to this approach. First, the resolution of our unit additions data is rough. The Census only publishes this data biannually, so monthly values are interpolated. The dates that the data are published do not line up perfectly with the Specialized code implementation dates (the ACLF are published in April and November, and most communities implement new code in July and January). So some unit additions may be on the “wrong” side of the implementation date (though there is no reason to think this would be biased for or against the Specialized code). Second, housing additions are by nature a lagging indicator. They show how much housing has been completed already but not how much housing is likely to be built in the future.

Fortunately, we have another source we can use: building permits data, which we obtain from the U.S. Census Building Permits Survey. The building permits data are a messier way to measure housing production than actual units. Not all permitted units actually get built. There are gaps in reporting, which mean values for some towns are interpolated by the U.S. Census instead of reflecting actual values. The data for 2025 are still preliminary. And permitting data do not reflect units that are removed from the supply (e.g. when existing buildings are demolished to make way for new projects). But they are useful as a rough leading indicator of future housing unit creation. And they are available on a monthly basis, which makes them especially useful for the before/after comparison we are trying to make.

We run the same analysis we did with the unit additions above, looking at the average number of units permitted within each community 12 months after implementation of the Specialized code and dividing it by the average number of units permitted in the 12 months prior to implementation. The results are similarly positive in the Specialized code’s favor. Again, we use the median instead of the mean to avoid misleading results (using the mean would show an average increase in units permitted of 368%). The median community shows an increase in units permitted per 100,000 people of 15% after implementing the Stretch code.

Conclusion

Energy codes are far from the only factor that shapes housing production. Different demographics, levels of demand, buildable areas, permitting timelines, zoning restrictions, requirements like the MBTA Communities Act, and other factors may all be affecting the number of units added. We cannot attribute all the differences in housing production to the energy codes without thoroughly analyzing other relevant factors. And there is no guarantee that past patterns will continue to hold.

That said, there is no evidence in our analysis that energy codes in Massachusetts are having a negative impact on housing production:

• Specialized code communities have produced 17% more housing units than Stretch code communities and 33% more than Base code communities.
• Stretch code communities have produced 14% more housing units than Base code communities.
• Among communities that have adopted the Specialized code, the median change in housing unit additions has been an increase of 25%. Among those communities, the median change in housing unit permits has been an increase of 15%.

These findings are consistent with recent work by the American Council for an Energy-Efficient Economy, which found that “stronger energy codes are not slowing down new home construction.” Their analysis looked at single-family and multifamily building permits in the five largest states that adopted the 2021 update to the International Energy Conservation Code, and found no change in their permitting behavior before and after adoption (New Jersey, Maryland, Florida, Illinois and Washington).

These findings are also consistent with research by the Massachusetts Clean Energy Center, which found that the Specialized code’s requirement for new, large multifamily buildings to meet “Passive House” standards only adds a cost premium of 2-3%. This cost premium is partially offset by incentives from the Mass Save. For affordable housing, the premium is further offset by the additional points that projects meeting passive house standards receive when competing for Low Income Housing Tax Credits.

Passive House Massachusetts also recently completed its own research on Cost-Effective Passive House Delivery, compiling insights from local teams on how they have completed projects without unnecessary cost increases. The fact that many teams are finding good ways to keep costs down on passive house projects may help explain how communities have maintained housing growth as codes have become more stringent.

Housing supply is critical to affordability, but it is only one component. Energy codes directly affect energy affordability for occupants by reducing the energy needed to operate a building. But they also reduce energy costs for all ratepayers, by reducing the need to invest in grid infrastructure to serve unnecessary loads. Dramatically reducing the peak load that new buildings add to the grid has a major impact on how much additional generation, transmission, and distribution is needed. The state estimates that code-driven efficiency gains will “result in a x5 reduction in the ratepayer impact of future electric grid investments.” Reducing energy costs — both directly through increasing efficiency and indirectly through avoiding unnecessary infrastructure — is crucial in a state where low-income residents face an average energy burden of 10%. On top of these energy affordability gains, passive house requirements may also make health, comfort, and long-term maintenance more affordable. In future work we’ll analyze how codes and passive house affect these other affordability considerations in the Commonwealth.