Quantification of ENERGY STAR® Qualification for New Homes: An Investigation of Market Impacts

Buildings represent 41% of the annual energy consumption in the United States, more than either manufacturing or transportation. As society becomes increasingly energy conscious, individuals seek new ways to reduce residential energy usage. As a result, third-party verified energy efficiency programs are gaining popularity in residential construction and offer many benefits to home builders and home buyers alike. ENERGY STAR® is a popular third-party verified construction program that reduces home energy consumption by a minimum of 15% compared to code-built homes. Obstacles to widespread implementation of the ENERGY STAR program include the added costs involved in building an ENERGY STAR qualified home and home builder reservations concerning financial return on investment. This study examined ENERGY STAR qualified home sales and compared their market performance to non-qualified homes within a ten-county region of central North Carolina. It was found that ENERGY STAR Homes sold faster and sold for higher prices than non-qualified homes. Additionally, they sold for a greater percentage of the listing price and earned a higher price per square foot than non-qualified homes. These findings provide much-needed evidence that there is a market advantage for ENERGY STAR qualified homes that can achieve a positive rate of return on investments.