Achieving carbon emission reductions in the residential building sector while maintaining economic growth represents a global challenge, particularly in rapidly developing regions with internal disparities. This study examines Jiangsu Province in eastern China—a economic hub with north-south development gradients—to develop an integrated framework for differentiated carbon reduction pathways. The methodology combines spatial autocorrelation analysis, logarithmic mean Divisia index (LMDI) decomposition, system dynamics modeling, and Tapio decoupling analysis to examine urban residential building emissions across three regions from 2016–2022. Results reveal significant spatial clustering of emissions (Moran’s I peaking at 0.735), with energy consumption per unit area as the dominant driver across all regions (contributing 147.61%, 131.60%, and 147.51% respectively). Scenario analysis demonstrates that energy efficiency policies can reduce emissions by 10.1% while maintaining 99.2% of economic performance, enabling carbon peak achievement by 2030. However, less developed northern regions emerge as binding constraints, requiring technology investments. Decoupling analysis identifies region-specific optimal pathways: conventional development for advanced regions, balanced approaches for transitional areas, and subsidies for lagging regions. These findings challenge assumptions about environment-economy trade-offs and provide a replicable framework for designing differentiated climate policies in heterogeneous territories, offering insights for similar regions worldwide navigating the transition to sustainable development.