Building Better: What Drives Change?

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Comfort

October 31

“Isn't it nice to know your home is ready for the future?”

The 2024 U.S. election ushered in sweeping economic and regulatory changes that are reshaping how homes are designed, built, and financed. From shifts in tax policy and tariffs that influence material costs to new regulations affecting energy incentives, builders are being challenged to balance affordability with long-term performance.

Introduction

As a ventilation manufacturer, we see firsthand how these pressures influence decisions on the job site. High-performance homes represent the future of residential construction—offering better comfort, durability, and efficiency—but rising material and labor costs tempt some to cut corners. That’s why it’s more important than ever to advocate for building better. Through balanced ventilation and indoor air quality solutions, we help builders maintain performance even as costs rise.

Despite political and economic headwinds, building homes that are ready for the future requires pride, purpose, and persistence. To better understand where we are, and where we’re headed, we explored the origins of high-performance homebuilding and the forces that continue to shape its evolution.

As we adapt to these shifts, one question remains: what truly makes a home ready for the future? To answer that, we need to look back at how the pursuit of better homes began.

What are High-performance Homes?

According to the Energy Policy Act of 2005, a high-performance building describes a building that integrates and optimizes all major high-performance building attributes, including energy efficiency, durability, life-cycle performance, and occupant productivity.

The term ‘energy efficiency’ dates back to the 1880s but gained new relevance during the 1970 oil embargo, when energy prices soared. Regulators responded with conservation measures—like the 55-mph speed limit—that reshaped how the U.S. approached energy use. These ideas soon carried over into homebuilding, inspiring tighter envelopes and better insulation.

The Lo-Cal house, a pioneering project in the field of super-insulated and energy-efficient homes | Image Credit: energyvanguard.com

For home builders this meant building tighter home envelopes. In 1976, a group of engineers and architects from the University of Illinois designed a home that consumed “60% less energy than even the most efficient buildings of the time.” This house, known as the “Lo-Cal” house, focused on creating a highly insulated envelope, and in Canada, influenced the “Saskatchewan Energy Conservation House”, which prioritized energy losses and peak loads. In 1982, the concept of superinsulation and passive solar was born, and was known as “passive house”.

Building Efficiency Metrics and Green Home Certifications

The path to building better homes has been shaped by a dynamic mix of individual initiative, nonprofit leadership, and government support. The HERS Index gave builders a standardized way to measure energy performance, driven by lenders and consumer awareness.

Similarly, LEED for Homes, launched by the U.S. Green Building Council® (USGBC) in 2000, was the product of architects, engineers, and sustainability advocates, later supported by federal agencies like the Federal Energy Management Program. In contrast, ENERGY STAR® for Homes, created by the EPA in 1995, and the 45L Tax Credit, enacted by Congress in 2005, were government-led efforts designed to scale energy-efficient construction through incentives and recognition. Together, these tools reflect a collaborative ecosystem, where progress often begins with passionate individuals and organizations, and gains momentum through public policy.

Grassroots Programs and Voluntary Certifications

Before federal incentives took hold, several voluntary home certification systems emerged. These certification systems were created by builders, nonprofits, and engineers seeking to measure and improve building performance. The most widely recognized include the HERS Index, LEED for Homes, and the Passive House standard.

HERS Index

To compare homes of the future to an energy-efficiency standard, the creation of the Home Energy Rating System (HERS®) index is based on the “Standard New Home”. This home equates to the average energy-efficiency of a new U.S. home in 2006. As previously stated on our blog, the HERS Index is managed by the Residential Energy Services Network (RESNET) and assigns a numerical score to a home based on its energy consumption.

The HERS score provides builders with a quantifiable way to measure and compare energy-efficiency. The implementation of the HERS index was mainly the result of lenders offering more favorable terms for these homes and consumer awareness. The Canadian Residential Energy Services Network (CRESNET) operates in the same capacity as RESNET, but serves the Canadian provinces.

Leadership in Energy and Environmental Design (LEED)

In the late ‘90s, the Leadership in Energy and Environmental Design (LEED) certification was born. LEED-certified residential homes have always focused on health, energy savings, and home value. Version 5 adds onto that and issues a stronger call for decarbonization with over 50% of LEEDs credits addressing it.

Passive House (Residential)

The Passive House program came to the United States in 2002 when Katrin Klingenberg built the Smith House in Urbana, Illinois to Passivhaus (Passive House) standards. When the Passive House Institute of the United States (PHIUS) was created, climate-specific Passive House standards were developed. PHIUS is a non-profit organization committed to decarbonization.

Government-led Incentives

Following grass-root efforts, federal incentives took hold. The ENERGY STAR for Homes and the 45L Tax Credit are two of the most prominent government-led incentives in the United States. These credits enable builders to construct better, more sustainable, and more comfortable homes.

ENERGY STAR for Homes

Launched in 1995 by the U.S. Environmental Protection Agency (EPA), the ENERGY STAR for Homes program was designed to help homebuyers identify new homes that were significantly more energy-efficient than standard construction. The program set performance benchmarks for builders and raters, encouraging the adoption of high-performance windows, sealed ducts, and efficient HVAC systems. Over time, ENERGY STAR became a trusted label, with millions of homes certified and billions in energy savings realized.

45L Tax Credit

The 45L Tax Credit for Energy-Efficient Homes was enacted by Congress in 2005 as part of the Energy Policy Act, offering financial incentives to builders who construct or substantially renovate homes that meet specific energy-saving criteria. Unlike grassroots metrics like the HERS Index, 45L was a government-created program, designed to accelerate market adoption of energy-efficient construction through direct tax relief. Administered by the IRS, the credit has become a key tool for builders seeking to offset the costs of high-performance construction while meeting federal energy goals.

Regulation Reversal

While incentives like the 45L Tax Credit and ENERGY STAR certifications have helped push the industry toward higher performance, they’ve also faced political and economic headwinds.

The 45L credit, for example, was introduced in 2005 to reward builders for energy-efficient homes. It was renewed and expanded multiple times, but its future remains uncertain due to budget cuts and shifting priorities in Washington D.C. Originally set to expire in 2032, the bill is now set to expire in 2026.

ENERGY STAR has evolved from a label to a comprehensive tool, utilized by over 3,400 builders and developers. Since ENERGY STAR is not in the FY2026 EPA budget, it will most likely be phased out; however, the good news is it may be able to be privatized. Administrator Lee Zeldin has suggested that private entities could take over the program, though experts warn this could compromise transparency and consumer trust.

Despite setbacks like these over the years, the building industry has continued to evolve. When federal support waned, local governments and private builders stepped up. Cities like Austin, TX and Vancouver, BC implemented their own building performance standards, requiring tighter envelopes, better ventilation, and verified energy savings. These local codes often exceeded national standards and became models for broader adoption.

Does Building Better Require Incentivization?

High-performance homebuilding has followed a fascinating, non-linear path. It began with a handful of curious engineers experimenting with super insulated envelopes to reduce energy loss. Their work inspired other building professionals to pursue homes that were not only energy-efficient, but also tight, comfortable, and durable. These pioneers weren’t driven by incentives or consumer trends, they were motivated by curiosity and a desire to solve problems.

As Albert Einstein once said,

“Curiosity and creativity are intelligence having fun.”

Today, even in the face of rising costs and shifting priorities, that same spirit endures. The commitment to efficiency, resilience, and occupant health remains the true foundation of homes built for the future.

From HRVs and ERVs to inline fans, Fantech products make it easier to build homes that are energy-efficient, comfortable, and resilient. Together, we help homeowners enjoy the confidence of a home that’s ready for the future.