This paper looks through the many benefits of earth not only as a building element in its natural form but as a building mass, energy pack and spatial enclosure which characterized by location, unique physical terrain and climatic factors can be utilized in developing housing units that will provide the needed benefits of comfort alongside the seasons. Firstly the study identifies existing sunken earth houses in the North-west of China together with identifying the characters that formed the ideas behind the choice of going below the ground. Secondly, the study examines the pattern of heat exchange, heat gains and losses as to identify the principles that makes building in earth significant as an energy conservation system. The objective of this, is to relate the ideas of sunken earth home design with such principles as the passive annual heat storage systems (PAHS) in producing houses that will serve as units used to collect free solar heat all summer and cools passively while heating the earth around it and also keeping warm in winter by retrieving heat from the soil while utilizing the free solar heat stored throughout the summer as a year-round natural thermal resource. (C) 2007 Elsevier B.V. All rights reserved.