How Energy Efficiency Goals Hinge on Home Remodeling

Pouring money into an aging house can actually translate into savings for consumers over the long term.

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In addition to updated kitchens and bathrooms, house hunters are increasingly looking for upgrades that might be less flashy, but will save them money over the long run.

About 94 percent of homebuyers want energy-star rated appliances according to the most recent National Association of Home Builder's survey of homebuyer preferences. Another 91 percent sought an overall energy-star rating for the home, and almost 90 percent wanted energy-star rated windows.

[READ: Net-Zero Energy Home Could Make Utility Bills a Thing of the Past]

The good news is, more newly built homes fit that bill, which is making the nation's housing stock increasingly energy efficient. And the Department of Energy's Residential Energy Consumption Surveys provide the proof.

Between 2005 and 2009 (the latest data available), the total number of households increased by 2.5 million, yet total residential energy consumption was down slightly. In fact, housing-based energy consumption fell almost 6 percent on a per-household basis. While some of the energy savings can be credited to the Great Recession—during which many Americans lost their jobs and income, limiting overall consumption including energy—the decline in energy use is also because of important advances in how homes use energy.

Newly constructed homes tend to be more efficient than older homes with respect to energy use, particularly as measured on a per square foot basis.

Consumers who purchase newly built homes aren't the only ones who can benefit from lower energy bills. Upgrading existing homes to include more energy efficient features can save money for those homeowners, especially in the Northeast and Upper Midwest, both of which have older housing stocks and colder climates.

In recent years, tax incentives have made it more attractive for homeowners to invest in making energy-efficient upgrades to their homes. Some programs (the section 25C credit) offer incentives to update old, drafty windows and doors, and others (the section 25D credit) give a tax credit to homeowners who install solar panels or other power production devices on their property.

[REPORT: Solar Scores Big Gains in Electricity Generation]

Homeowners who add energy-efficient features to their homes can even certify their renovation projects by adhering to the National Green Building Standard®, which ensures upgrades meet efficiency targets and offers homeowners an added competitive edge when they sell their home in the future.

In 2010, more than 7 million Americans claimed $6 billion in tax credits because of programs like these, which have supported jobs in the remodeling sector and will pay dividends in the future as improvement of the nation's aging housing stock continues.

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  • Robert Dietz is an economist with the National Association of Home Builders (NAHB). Previously an economist with the Congressional Joint Committee on Taxation, Robert writes on housing and policy issues at NAHB's economics blog Eye on Housing. Follow Robert on Twitter at @dietz_econ. The information presented here does not necessarily represent the views of NAHB or its membership.