As global and local visions for sustainable living environments are increasingly supported by policies and concrete practices in construction, the building and housing sector is seeking to mitigate its environmental impact as well as assume a greater social responsibility. The overarching policy objectives set to concretize what a sustainable housing development entails, however, tend to rely on equivocal terminology, allowing a varied interpretation by key industry practitioners. Though in line with an ecological modernization paradigm in policy, the promotion of a market-driven environmentalism in housing faces multiple challenges as varying interests and perspectives collide. Supported by empirical findings of a semi-structured interview study conducted with housing developers in a new ‘green’ urban district in Göteborg, Sweden, theoretical frameworks surrounding the paradoxical path towards a sustainable housing development are presented. Inconsistencies between outspoken ambitions; social dimensions; and the framing of efficiency in new housing are discussed. Possibilities for the housing sector are given in the recognition of new forms of development, where a systemic perspective is required in the alignment between how industry, policy and the market perceives housing development and what is actually sustainable.