Enhancing energy efficiency in residential buildings is a crucial step toward mitigating climate change and reducing greenhouse gas emissions. Retrofitting existing buildings, which account for a significant portion of energy consumption, is critical particularly in regions with outdated and inefficient building stocks. This study presents an Artificial Intelligence (AI) and Machine Learning (ML)-based framework to recommend energy efficiency measures for residential buildings, leveraging accessible building characteristics to achieve energy class targets. Using Latvia as a case study, the methodology addresses challenges associated with limited datasets, class imbalance and data scarcity. The proposed approach integrates Conditional Tabular Generative Adversarial Networks (CTGAN) to generate synthetic data, enriching and balancing the dataset. A Multi-Layer Perceptron (MLP) model serves as the predictive model performing multi-label classification to predict appropriate retrofit strategies. Explainable Artificial Intelligence (XAI), specifically SHapley Additive exPlanations (SHAP), ensures transparency and trust by identifying key features that influence recommendations and guiding feature engineering choices for improved reliability and performance. The evaluation of the approach shows that it notably overcomes data limitations, achieving improvements up to 54% in precision, recall and F1 score. Although this study focuses on Latvia, the methodology is adaptable to other regions, underscoring the potential of AI in reducing the complexity and cost of building energy retrofitting overcoming data limitations. By facilitating decision-making processes and promoting stakeholders engagement, this work supports the global transition toward sustainable energy use in the residential building sector.