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Research Shows Buyers Would Pay More for Homes with Higher Home Energy Scores

By Better Buildings Beat Team on Aug 27, 2020
Home Energy Score logo

Developed by DOE and its national labs, the Home Energy Score provides homeowners, buyers, and renters directly comparable and credible information about a home’s energy use. A new study by the American Council for an Energy-Efficient Economy (ACEEE) has demonstrated the importance of sharing this information with home buyers and confirmed that buyers prefer homes with higher scores.

Nearly all home buyers begin their search online. In most cases, buyers cannot make efficiency comparisons between homes because major listing sites typically do not include this information. To address this gap, ACEEE study mimicked a popular real estate search website and drew on a national audience of 1,500 people who planned to buy a home in the next five years. Participants were asked to imagine they were using a website to search for a home and click on the homes they preferred. Their searches produced six sets of results – each showing three homes. When energy efficiency was included as one of the home’s attributes, participants were more likely to click on the energy-efficient option, and less likely to click on the least efficient option, than those who did not see efficiency information.

The authors of the study wanted to understand if energy labeling affects buyers’ willingness to pay for a home. Consumers in the study demonstrated a willingness to pay more for an efficient home, particularly if the information is displayed on a relative scale. The authors concluded that if home listing websites included efficiency information, homeowners and sellers would likely be more interested in undertaking energy efficiency upgrades, given the payoff at time of sale.

The study also presented energy efficiency information in five different ways to determine which was most effective. The image below shows some of the variations used in the simulated real estate website:

Display variations from Left to Right:
Top row – Home Energy Score, Home Energy Score scale, Estimated annual home energy costs
Bottom row – Estimated annual home energy costs + Home Energy Score scale, Energy saver!, Control condition with no energy information

According to the ACEEE study, home buyers valued efficiency most when it was presented as an image depicting the home’s efficiency score along a continuum from inefficient to efficient, based off the design of DOE’s Home Energy Score.

Including energy efficiency information in home listings helps buyers understand efficiency performance of prospective homes, attribute value to efficiency features, and ultimately increase demand for residential efficiency upgrades. ACEEE’s study shows that consumers want this information, and value efficient homes.

The Home Energy Score uses a standard assessment of energy-related assets to compare energy use across the housing market. Several U.S. cities use Home Energy Score or other similar tools in residential real estate transactions.

The Home Energy Score program works with Earth Advantage on the Green Building Registry and Northeast Energy Efficiency Partnerships (NEEP) on the Home Energy Labeling Information eXchange (HELIX) to deliver scores to home buyers through multiple listing services. Learn more about the Home Energy Score program and the recent Home Energy Information Accelerator.

All photos and charts are credited to ACEEE.