HERS Rating Gaining Traction

Originally published by: Builder OnlineMay 3, 2012

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Two years ago, questioning a group of builders about the biggest problems facing the green and energy-efficient building movement would more often than not elicit a popular complaint: There’s no industry-wide standard. While that refrain can still be heard today, it seems to be fading out as more and more builders have turned to what may be becoming the industry’s default: HERS scores.

In model homes across the country, small thermometer heat charts are popping up next to thermostats as builders use their Home Energy Rating System (HERS) score to compete with other new homes and, importantly, existing-home inventory.

Even as the number of homes being built in the U.S. has declined in recent years, the percentage of new homes being rated by HERS has been increasing, says Steve Baden, executive director at Residential Energy Services Network (RESNET), which developed the HERS rating. "We rated the same number of homes in 2010 and 2011: 120,000. But in 2010, the percentage of new homes that represented was in the 30s. In 2011, it was in the 40s."

RESNET has entered into an agreement with 20 of the country’s largest home builders, including KB Home, Pulte, and David Weekley, to have their homes rated by HERS, Baden says. "We’ve also gotten nearly a hundred local builders that have also made the commitment."

And that success seems to be creating a self-perpetuating cycle. "The HERS score wins because it’s simple and it’s well adopted," says C.R. Herro, vice president of Environmental Affairs at Meritage Homes. Its widespread use offers buyers both brand recognition as well as a better chance at being able to compare "apples to apples" from one home to the next on the same rating scale, he says.

Part of HERS’ success is likely due to the foreclosure crisis: At a time when home builders are being forced to compete with the rock-bottom prices of distressed properties, a score that can emphasize the difference in energy savings between an existing home and a new home is crucial. A score of 130, at the very top of the HERS scale, represents the energy use of an average existing home, which makes it easy for new-home builders to tout the benefits of new over used. "Just building a code home, you’re at least 30% more efficient than the average existing home," Baden points out.

But it’s for just that reason that some builders take issue with the rating system. "We have mixed feelings about it," says Jim Bastoni, an owner at Imagine Homes in San Antonio. "It can be really confusing for consumers. It sounds a lot better to say your home is so much more efficient rather than saying you’re up to code." Instead, Imagine focuses on more physical demonstrations, such as leaving chocolate bunnies in the attics of their models to show off that they don’t melt. "Customers can feel it. They can sense it. They know what that means."

However, several of the builders interviewed cited straightforwardness as one of the main features that drew them to HERS. "We have worked with a number of different rating companies and kept coming back to what would resonate most with customers and what would be easiest to understand," says Pierrette Tierney, vice president of sales and marketing at Taylor Morrison’s Phoenix division. That builder recently pushed out its company-wide Elem3nts program, in which all of its communities will carry energy scores based on HERS ratings. "I look at two things. First, it’s incredibly easy to understand. And second, you can put money to it. We’re not touting to be the greenest builder out there, but we want to give our buyers a message about dollars and cents."

Since each point on the HERS scale is worth about $30 per year in savings, Tierney says, it’s easy for customers to do the math on what they’ll save as they compare homes.

Meritage also uses HERS to focus on cost savings, and rather than touting what buyers can save on individual energy bills, the builder talks instead about the larger numbers: what customers will save over the 30-year life of their mortgage. "We do a cost analysis on every home, specific to that home, and look at what an average family will save. … When we build a home that scores a HERS 40 and look into the difference in operating cost over 30 years [compared to an existing home], that translates into $75,000 in savings. When you take that $120 bucks a month and scale that out over a year and 30 years, those are the things that get the average consumer to stop and say, ‘Okay, this isn’t just a dinner out once in a while. This is something that’s going to significantly influence my quality of life. And the HERS score is how you get that to be more than just anecdotal."

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