Do Building Codes Drive Up Housing Prices?
The argument has a certain intuitive logic: require builders to do more, and costs go up. Costs go up, prices follow. Therefore, modern building codes — with their increasingly stringent energy, structural, and safety requirements — are contributing to the housing affordability crisis.
It's a claim heard in developer meetings, legislative hearings, and code adoption debates across the country. It is also, according to a major new study from the University of Alabama, largely unsupported by the data.
Published in June 2026, "Do Housing Prices Change with Building Codes?" by researchers Sebastian Awondo, Shane Crawford, and Lars Powell offers the most comprehensive empirical examination of this question to date. Their findings challenge a widely-held assumption — and have direct implications for how we think about building standards, housing affordability, and the cost of designing to a higher standard.
Background: Building Codes and How They Work
Building codes are the minimum technical requirements for the design and construction of buildings. In the United States, most residential construction is governed by the International Residential Code (IRC), a model code developed by the International Code Council and updated on a three-year cycle.
States and municipalities adopt the IRC — or modified versions of it — through their own legislative processes. This means adoption is uneven: one state might be building to the 2018 IRC while a neighboring state still operates under the 2009 edition. Some jurisdictions adopt the model code largely intact; others amend it significantly to reflect local conditions, political priorities, or industry pressure.
Each new IRC edition introduces changes across several areas: structural load requirements, energy efficiency standards, fire safety provisions, ventilation requirements, and indoor air quality measures. The Home Innovation Research Labs (HIRL) have estimated that cumulative code changes from the 2009 through 2018 IRC editions added between $14,300 and $40,400 to the cost of constructing a typical new home — meaningful numbers that have fueled the affordability argument.
What the HIRL cost estimates don't capture, however, is whether those construction cost increases actually translate to higher prices for buyers. That is the question Awondo, Crawford, and Powell set out to answer.
What the Research Did
The study analyzed 2.7 million home sales across 26 states from 2011 to 2022, examining 45 separate adoptions of the 2009, 2012, 2015, and 2018 editions of the IRC. The 26 states were selected because they mandate statewide code adoption — making it possible to establish clear before-and-after comparisons. Minnesota, notably, is among the states studied.
Researchers used hedonic regression models that controlled for the factors most likely to influence home prices independently of code changes: house size, lot size, number of bedrooms and bathrooms, age of the home, sale timing, and ZIP Code. By controlling for these variables, they isolated the observable effect of code adoption on price.
Two model specifications were used. The first examined only newly constructed homes — houses built and sold for the first time within two years of a code adoption. The second expanded the comparison group to include resales of homes up to ten years old, enabling a broader set of adoptions to be tested. Robustness tests addressed known uncertainty in year-built data. A cross-border analysis compared building activity in adjacent North Carolina and South Carolina counties to test whether stricter codes cause builders to shift construction to less-regulated jurisdictions.
The Findings
The results run counter to the prevailing narrative.
In the new-construction sample, 9 of 15 code adoptions showed no statistically significant change in home prices. Three showed modest price increases ranging from 1.8% in Maryland to 5.4% in Kentucky; two showed decreases. Considered in aggregate, the sum of effects across all 15 adoptions was statistically indistinguishable from zero.
The expanded sample, covering all 45 adoptions, tells a more decisive story:
→ In 43 of 45 code adoptions studied, average home prices did not increase after a new edition took effect.
→ In 32 of those instances, prices actually decreased significantly — by as much as 26.7% in Michigan following the 2015 IRC adoption.
→ Only 2 adoptions were followed by modest price increases: Kentucky and Virginia adopting the 2012 IRC, at 2.4% and 1.8% respectively.
→ Cross-border analysis found no evidence that builders shift construction to states with less stringent codes when standards tighten.
"The results do not support the claim that modern building code adoption systematically increases home prices or constrains new housing supply." — Awondo, Crawford & Powell, 2026
What the Study Doesn't Tell Us
Intellectual honesty requires naming what this research does and doesn't establish.
Correlation is not causation. The study is explicit on this point: the authors cannot identify a causal mechanism linking code adoption to price changes in either direction. They observe that the feared pattern of systematic price increases doesn't appear in the data — but they cannot rule out the possibility that other factors are masking a real effect.
The dataset has real scope limitations. It covers only states with mandatory statewide adoption and only IRC editions through 2018. Jurisdictions with patchwork adoption histories, significant local amendments, or more recent code editions are not captured. The 2021 IRC and its expanded energy and indoor air quality provisions are not examined at all.
Sale price is not construction cost. These are not the same thing. Construction costs almost certainly do increase with code updates, as the HIRL estimates suggest. What the study shows is that those increases don't appear to be systematically passed through to buyers. Builders may be absorbing them through reduced margins, amortizing across larger projects, or finding efficiencies elsewhere. The mechanism is not captured.
Funding context matters. The research was partially funded by the International Code Council, the Insurance Institute for Business & Home Safety, and the American Property Casualty Insurance Association — organizations with institutional interests in code adoption. The authors assert independence, and the methodology is credible, but the funding source is worth holding in mind.
This is one important piece of evidence. It is not the final word.
What This Means in Practice
For homebuyers and homeowners: a home built to a current code edition is likely to be competitively priced relative to older stock — not penalized by the standards it was built to. And it carries measurable advantages that don't show up in the purchase price comparison: better structural resilience, improved energy performance, and in many cases meaningfully healthier indoor air quality through mechanical ventilation requirements introduced in the 2012 and 2015 IRC editions.
For builders and developers: "code compliance drives up costs" is a harder argument to make to an informed client when the data shows prices trending flat or down in 43 of 45 tested adoptions. The real cost drivers in housing — land, labor, supply chain disruption, financing, and zoning constraints — aren't going away. But code updates appear to be a smaller factor in buyer price than commonly assumed, and the data does not support treating them as a primary affordability lever.
For policymakers and communities: the study's conclusion has direct implications for jurisdictions considering or delaying code adoption. The common argument — that delaying adoption protects affordability — is not supported by the price data. The cost of delay, however, is measurable: FEMA estimates that modern building codes could prevent over $130 billion in disaster losses over a 20-year period. The National Institute of Building Sciences calculates a benefit-cost ratio of 11:1 for effective modern code implementation. Deferring adoption trades a documented safety and resilience benefit for a price benefit the data cannot find.
The Larger Question: Beyond Code Minimum
This research examines mandatory baseline standards — the floor of acceptable building practice. Its implications extend further, toward a question the study doesn't directly address but that sits at the center of ADG's work: if code minimum updates don't systematically drive up prices, what does that tell us about the cost of voluntarily designing to higher standards?
At Architectural Design Group, we design beyond code minimum on every project. We work with the Living Building Challenge framework — the most rigorous green building standard in the world — as a design benchmark. We specify Red-List Free materials, avoiding the chemicals documented by the International Living Future Institute as most harmful to human health. We pursue Passive House principles for energy performance and indoor air quality. None of these are required by any building code in Minnesota.
The objection we encounter most often is the same one this study examines at the code level: designing to higher standards makes buildings unaffordable.
The University of Alabama research doesn't directly answer that question. What it does is remove a piece of the foundation that objection rests on. If even mandatory code upgrades — with real, documented construction cost increases — don't systematically raise what buyers pay for homes, the case that voluntarily choosing healthier materials or higher performance targets will price a project out of the market becomes considerably harder to sustain.
Better materials don't always cost more. Better design often reduces long-term operating costs. And as this research suggests, the market appears capable of absorbing higher construction standards without systematically punishing buyers at the point of sale.
Better buildings don't have to cost more. The market data is starting to agree.
Conclusion
The argument that building codes drive up housing prices has shaped policy debates, slowed code adoption, and provided cover for designing to the minimum. The University of Alabama study is a credible, large-scale empirical challenge to that argument.
It isn't without limitations. It doesn't close the debate. But it shifts the burden of evidence.
For anyone involved in the built environment — designing, building, regulating, or buying — the question worth asking isn't whether high standards are affordable. It's whether we can afford to keep designing to the minimum when the data suggests higher standards don't have to cost buyers more, and the benefits of better buildings are real and well-documented.
At ADG, we've been designing to that question for years. If you're planning a project — residential, commercial, or adaptive reuse — and want to understand what designing beyond code minimum looks like in practice, we'd welcome the conversation.
Learn more about ADG's approach to healthy building design at archdesign.group, or contact us to schedule a pre-design consultation.
References
Awondo, S., Crawford, S., & Powell, L. (2026). Do Housing Prices Change with Building Codes? University of Alabama Center for Risk and Insurance Research.
Federal Emergency Management Agency. (2020). Building Codes Save: A Nationwide Study. U.S. Department of Homeland Security. fema.gov/building-codes-save
Home Innovation Research Labs. (various years). Estimated Costs of Building Code Changes. National Association of Home Builders. homeinnovation.com
National Institute of Building Sciences. (2019). Natural Hazard Mitigation Saves: 2019 Report. nibs.org
International Living Future Institute. (2024). Living Building Challenge 4.1 Standard. living-future.org/lbc
U.S. Environmental Protection Agency. Introduction to Indoor Air Quality. epa.gov/indoor-air-quality-iaq/introduction-indoor-air-quality
U.S. Environmental Protection Agency. Energy, Weatherization and Indoor Air Quality. epa.gov/indoor-air-quality-iaq/energy-weatherization-and-indoor-air-quality