North America Tankless Water Heater Market (2026 - 2033) Size, Share & Trends Analysis Report By Product (Electric Tankless Water Heater, Gas Tankless Water Heater), By Application (Residential, Commercial), By Country, And Segment Forecasts

North America Tankless Water Heater Market Summary

The North America tankless water heater market size was estimated at USD 995.8 million in 2025 and is projected to reach USD 2,206.6 million by 2033, growing at a CAGR of 10.5% from 2026 to 2033. The market growth is strongly supported by a clear shift toward energy-efficient household infrastructure, as consumers and regulators increasingly prioritize lower energy consumption and reduced utility costs.

Tankless systems heat water on demand rather than maintaining a continuously heated storage tank, significantly reducing standby energy losses. This efficiency advantage aligns with tightening energy regulations and incentive programs across the U.S. and Canada, which encourage the replacement of conventional storage heaters through rebate schemes and efficiency standards. As a result, homeowners are actively transitioning to high-efficiency models that offer long-term savings, compact design, and extended product lifespan, making tankless systems a practical upgrade within both new installations and replacement cycles.

Demand is further reinforced by rising residential construction and home renovation activity across North America, particularly in urban and suburban housing markets where space optimization and modern infrastructure are key priorities. Newly built homes increasingly feature tankless water heaters as standard, especially in single-family houses, townhomes, and premium apartment developments, where continuous hot water supply and energy efficiency are selling points. At the same time, renovation activity, driven by aging housing stock and post-pandemic home improvement trends, is accelerating replacement demand for outdated tank-based systems. Homeowners undertaking kitchen and bathroom upgrades are opting for tankless solutions to improve efficiency, free up space, and support multi-point hot water use, particularly in larger households with higher consumption.

Source: Grand View Research, IR Documents, Primary Interviews, Paid Databases

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Technological advancements and smart home integration are reshaping product adoption, positioning tankless water heaters as part of the connected home ecosystem rather than standalone appliances. Leading manufacturers such as Rinnai Corporation, Navien Inc., and Rheem Manufacturing Company are introducing models with Wi-Fi connectivity, mobile app controls, and advanced diagnostics, enabling users to monitor temperature settings, energy usage, and maintenance alerts in real time. These features enhance user convenience while improving system efficiency and reliability.

For instance, in January 2026, Rinnai America Corporation reinforced this innovation trajectory by showcasing its latest water-heating and home-heating solutions at the AHR Expo in Las Vegas. The company presented new commercial electric tank water heaters and high-efficiency heat pump systems alongside its advanced tankless models with smart connectivity features. This launch highlights a broader industry focus on improving energy efficiency, simplifying installation for professionals, and delivering flexible, high-performance systems aligned with evolving residential and commercial demand.

In parallel, ongoing advancements in heat exchanger design, condensing technology, and hybrid systems are enabling higher performance in colder climates and larger homes, addressing earlier limitations of tankless systems and expanding their applicability across diverse residential and light commercial use cases.

Brand Market Share Insights

The North America tankless water heater market’s growth is driven by a competitive mix of global and regional players, including Rinnai Corporation, Navien Inc., Rheem Manufacturing Company, and A. O. Smith Corporation, all of which focus on energy efficiency, performance, and installer-friendly designs. Manufacturers are improving system reliability through advanced condensing technology, durable heat exchangers, and higher flow rates suited for larger homes and colder climates, while also simplifying installation with compact units and flexible configurations. At the same time, smart connectivity is becoming a key differentiator, with Wi-Fi-enabled controls, mobile apps, and remote diagnostics allowing homeowners and service providers to monitor performance, optimize energy use, and enable predictive maintenance, positioning tankless systems as part of the broader connected home ecosystem.

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Consumer Insights

Consumer demand in the North America tankless water heater industry is increasingly influenced by lifestyle shifts toward larger homes and higher water usage patterns, particularly in suburban regions. Households with multiple bathrooms, modern kitchens, and appliance-heavy routines are prioritizing systems that can deliver uninterrupted hot water across simultaneous usage points without pressure drops. This is especially relevant in single-family homes where morning and evening peak demand is concentrated. At the same time, consumers are showing greater sensitivity to long-term operating costs, evaluating products based on energy savings over the system lifecycle rather than just upfront price, which is strengthening the appeal of tankless systems despite their higher initial investment.

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Another notable trend is the growing importance of reliability and service accessibility in purchase decisions, as water heating is a critical household utility. Consumers increasingly prefer brands that offer strong warranty coverage, nationwide service networks, and easy access to replacement parts, reducing the risk of downtime. In this context, contractor influence remains high, with installation professionals often guiding brand and model selection based on familiarity, serviceability, and technical support from manufacturers such as A. O. Smith Corporation and Rheem Manufacturing Company. Additionally, buyers are paying closer attention to noise levels, system durability, and compatibility with existing home infrastructure, reflecting a more informed, practical approach to purchasing decisions.

Product Insights

Gas tankless water heater accounted for a 65.1% revenue share of the North America tankless water heater market in 2025, driven by strong consumer preference for high-performance systems that deliver continuous hot water across larger households and multi-point usage. These systems are widely adopted in single-family homes and light commercial settings due to their higher flow rates and reliable operation in colder climates, where electric alternatives may be less effective. Consumers also favor gas units for faster heating and lower operating costs in regions with stable natural gas access, making them a practical long-term solution despite their higher upfront installation costs. At the same time, manufacturers such as Rinnai Corporation and Navien Inc. are enhancing this segment with condensing technology, improved durability, and smart connectivity features, reinforcing the continued dominance of gas tankless systems in the market.

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The electric tankless water heater market segment is expected to grow at a CAGR of 11.1% from 2026 to 2033, driven by rising demand for compact, energy-efficient solutions in urban residential settings. The increasing adoption of apartments and smaller living spaces is encouraging consumers to choose electric systems for their space-saving design and simpler installation, without gas lines or venting requirements. Renovation activity and point-of-use applications in kitchens and bathrooms are further supporting demand. At the same time, growing focus on sustainability and electrification is boosting adoption, as consumers prefer low-emission systems aligned with modern energy infrastructure.

Application Insights

The residential tankless water heater industry segment accounted for a share of 72.4% in 2025, driven by strong adoption across single-family homes and urban housing, where continuous hot water supply, energy efficiency, and space optimization are key priorities. Homeowners are increasingly replacing traditional storage systems with tankless units to benefit from on-demand heating, lower energy losses, and compact designs suited for modern kitchens and bathrooms. Rising renovation activity and new residential construction are further supporting demand, as these systems are integrated into contemporary home layouts focused on long-term cost savings and performance.

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The commercial tankless water heater segment is projected to grow at a CAGR of 10.1% from 2026 to 2033, driven by tightening energy efficiency regulations and rising operational cost pressures across commercial facilities. Businesses are increasingly replacing traditional storage systems with tankless units to reduce energy consumption, comply with building codes, and improve long-term efficiency, particularly in high-usage sectors such as hospitality and healthcare. At the same time, the growing emphasis on sustainability and carbon reduction is encouraging the adoption of energy-efficient systems that align with ESG goals and green building standards. In addition, the need for a reliable, uninterrupted hot water supply in critical operations is boosting demand, as tankless systems offer longer lifespan, lower maintenance risks, and consistent performance.

Country Insights

The U.S. dominated the North America tankless water heater industry, accounting for a revenue share of 78.3% in 2025. The U.S. tankless water heaters market is driven by strong residential adoption, ongoing home renovation activity, and widespread natural gas infrastructure. Homeowners are increasingly replacing traditional storage systems with tankless units to improve energy efficiency, reduce operating costs, and ensure a continuous supply of hot water, particularly in single-family homes and suburban developments. The market is further supported by the presence of established manufacturers such as Rheem Manufacturing Company and A. O. Smith Corporation, along with well-developed contractor networks that facilitate installation and servicing. In addition, advancements in condensing technology, smart connectivity features, and supportive energy-efficiency incentives are driving adoption, positioning the U.S. as the leading market in North America.

Canada Tankless Water Heater Market Trends

The Canada tankless water heater market is expected to grow at a CAGR of 11.2% from 2026 to 2033. The market's growth is driven by rising demand for energy-efficient, space-saving water-heating solutions across residential and light-commercial applications. Cold weather is driving the adoption of high-performance systems that deliver consistent hot water, particularly in single-family homes and multi-unit housing. Increasing renovation activity and replacement of traditional storage systems are further supporting demand, as homeowners seek lower energy consumption and long-term cost savings. In addition, government initiatives promoting energy efficiency and carbon reduction are accelerating the shift toward tankless systems.

Recent Developments

• In January 2026, Noritz America introduced its “Commercial One” initiative at the AHR Expo in Las Vegas, aimed at strengthening its presence in the commercial water heating segment. The program highlights its flagship NCC199 CDV Pro tankless water heater, designed for high-demand applications and featuring high efficiency, durability, and the ability to link multiple units for scalable performance. This initiative reflects the company’s focus on delivering reliable, energy-efficient, and modular hot water solutions tailored to large commercial and industrial environments.

• In October 2025, TruTankless opened a new 14,000-square-foot production, engineering, and training facility in Phoenix, Arizona, bringing manufacturing, R&D, and distribution operations under one roof. The integrated hub includes engineering labs, a training center for installers, and a full-scale production floor, aimed at improving product quality, reducing lead times, and strengthening supply chain efficiency. This expansion supports the company’s strategy to accelerate innovation and prepare for the launch of next-generation tankless water heating solutions.

North America Tankless Water Heater Market Report Segmentation

This report forecasts revenue growth at the regional and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2021 to 2033. For this study, Grand View Research has segmented the North America tankless water heater market report based on product, application, and country:

• Product Outlook (Revenue, USD Million, 2021 - 2033)

  • Electric Tankless Water Heater

  • Gas Tankless Water Heater

• Application Outlook (Revenue, USD Million, 2021 - 2033)

  • Residential

  • Commercial

• Country Outlook (Revenue, USD Million, 2021 - 2033)

  • North America

    • U.S.

    • Canada