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This research aims to assess a compact economic housing model design proposal using walls constructed of compressed earth blocks as a nucleus for sustainable urban housing in Egypt. This research also aims to evaluate the effect of the direction of the proposed compact building on the building’s internal thermal comfort, energy consumption, and carbon dioxide emissions. According to previous studies, residential buildings represent about 50% of land uses in Egyptian cities, consume about 19% of the energy produced, and are responsible for 10% of carbon dioxide emissions. All previous environmental studies commended the thermal performance of courtyard buildings in the hot-arid climate of which Egypt is a part. As a result, the authors directed many previous studies towards new housing patterns in Egyptian cities using court-yarded clustered housing to improve thermal performance, decrease energy consumption, and reduce carbon dioxide emissions. This research compares two residential buildings using design-builder simulation. The two buildings have the same housing unit area of 90 m2 to represent the social housing unit area in Egyptian cities. The first comparative building is a conventional residential building surrounded by solar radiation from all sides and uses walls constructed of solid cement bricks (SCB). The second comparative building is a cluster open court-yarded building using walls built of Compressed Earth Blocks (CEB). Results show that both the clustered open courtyard housing model whose main axis is in the (N-S) direction and the use of CEB has improved all of the examined measures.