When Drought Stalls Builders, Water Efficiency is Critical
In 2023, builders in Phoenix, Arizona’s booming housing market saw projects stall, not from lack of buyers, but from an inability to prove sufficient long-term water supply was available for planned developments.
With more than 64% of the U.S. experiencing some level of drought, water availability is increasingly shaping where and whether new homes can be built. In fast-growing, water-stressed regions, municipalities are making difficult decisions to limit or even halt new housing starts due to uncertainty around future water demand.
What’s often missing isn’t supply alone; it’s predictability. The RESNET® Water Efficiency Rating System, HERSH2O, offers a practical solution. Launched in 2021, HERSH2O provides builders with a standardized, data-driven way to quantify and communicate the water efficiency of the homes they build. As a WaterSense® approved certification methodology, homes achieving the WaterSense Label for Homes using HERSH2O are designed to use at least 30% less water than a comparable home built to 2006 standards. The system builds on RESNET’s nationally recognized HERS® Index, considered the gold standard for measuring home energy performance, by extending similar rigor and transparency to water use.
HERSH2O evaluates whole-house water performance, including both indoor and outdoor use and produces a score on a 0–100+ scale, where lower scores indicate greater efficiency. For homeowners, this translates into lower utility costs, often exceeding $1,000 annually for WaterSense Labeled homes.
For builders already using HERS Ratings for energy code compliance or above-code programs, integrating HERSH2O is straightforward. The process typically adds just 30 to 60 minutes during final inspection and leverages the same HERS Rater infrastructure.
This minimal additional effort delivers outsized value. It differentiates homes in increasingly competitive markets, reduces warranty callbacks by identifying leaks and installation issues early, provides verifiable performance data to buyers and appraisers, positions builders ahead of emerging water-related regulations and reduces the cost of water bills for buyers.
As water constraints tighten, being able to document and verify reduced demand is becoming a competitive advantage, not just a sustainability talking point.
Like the HERS Index, a HERSH2O Rating gives homeowners a clear, easy-to-understand measure of performance. It also provides assurance that the home’s water performance has been independently inspected by a trained, certified third party.
Even in new construction, leaks and fixture failures are common sources of costly damage. Identifying these issues before occupancy not only protects homeowners but also reduces builder liability and service calls.
In areas with tiered water pricing structures, efficient homes are more likely to remain in lower usage tiers, resulting in long-term savings and reduced strain on local water systems, minimizing the need for water restrictions.
The implications extend well beyond individual homes. For municipalities and water utilities, HERSH2O introduces a new level of precision in forecasting water demand from new development. Instead of relying on broad, often outdated assumptions, planners can use accurate water use estimates to determine how many new homes existing infrastructure can support.
This data-driven approach is already influencing policy discussions. In states such as Texas, policymakers have explored using HERSH2O-style ratings as a basis for adjusting permitting and infrastructure fees, rewarding lower-impact development with reduced costs.
Compared to traditional conservation strategies, such as distributing water-saving retrofit kits, this approach is both more targeted and more cost-effective. Rather than retrofitting inefficiency, it ensures homes are built to perform from the start, though HERSH2O can also be used on older homes to determine the most cost-effective water retrofit strategies.
WaterSense-labeled fixtures and appliances are now widely available, with cost and performance largely at parity with standard products. Most major manufacturers offer a full range of compliant options, making water-efficient construction more accessible than ever.
When combined with HERSH2O verification, these products deliver measurable, credible performance; something increasingly valued by consumers, lenders and policymakers alike.
Since water constraints are no longer a future concern, they are shaping today’s housing market. Builders who can demonstrate predictable, lower water demand will be better positioned to secure approvals, reduce risk and meet evolving buyer expectations. HERSH2O provides a simple, scalable way to do just that.
As the industry continues to adapt, the ability to quantify both energy and water performance won’t just be an advantage; it will be essential.
By Michael Matthews. He is the RESNET Programs Engagement Specialist. He may be reached at michael@resnet.us.
This column is featured in the read the May/June issue of Green Home Builder, read the print version.
