U.S. HVAC Systems Market Size, Share & Trends Analysis Report By Product (AC, Heat Pump), By Technology (Inverter, Non-Inverter), By End Use (Industrial, Commercial, Residential), And Segment Forecasts, 2019 - 2025

Report Overview

The U.S. HVAC systems market size was valued at USD 16.3 billion in 2018 and is expected to register a CAGR of 9.7% from 2019 to 2025. In 2018, more than 14 million units of Heating, Ventilation, and Air Conditioning (HVAC) systems were sold in the country. Increased demand for energy-efficient systems and the rising focus of consumers toward health and comfort levels in the residential sector will play a pivotal role in driving market demand. Additionally, the continued rise in infrastructure and construction activities is anticipated to contribute to market growth. 

Factors such as rising demand for new houses, increasing expenditure on construction activities, and growth in disposable income are also expected to fuel the market over the forecast period. For instance, according to data published by the United States Census Bureau, construction spending rose from USD 809.26 billion in 2010 to USD 1,293.98 billion in 2018. Similarly, privately‐owned housing completions in July 2019 were 6.3% higher as compared to July 2018, thereby paving the way for heating, ventilation, and cooling equipment in the country.

Proactive government initiatives are also anticipated to positively impact U.S. HVAC systems market growth over the forecast period. For instance, under the Taxpayer Relief Act of 2012 (U.S.)-2017, customers can apply for the Federal Energy Tax Credit. The credit does not apply to all HVAC units. HVAC systems that are eligible for the tax credits can claim 25C tax credits, which is 10% of the overall installation costs (maximum up to USD 500) or a certain amount ranging from USD 50 to USD 300. Additionally, USD 300 was the maximum credit applicable for qualifying heat pumps, packaged units, central air conditioners, and ductless mini-split systems.

The COOLAdvantage Program is an initiative by the New Jersey government body to offer tax credit and rebates for energy-efficient central heat pumps or air conditioners. Similarly, Con Edison, an energy company based in New York, provided a rebate of up to USD 800 for mini-split heat pumps in 2016. Though this program was temporary, it encouraged customers to install new HVAC systems. Over the forecast period, the launch of similar programs would play a pivotal role in driving the market.

High cost associated with maintaining and installing HVAC units poses a fundamental challenge to this market. The average maintenance cost for domestic use in the U.S. is USD 350 and may rise as high as USD 1,500 depending upon the system. Installation charges are relatively much higher, although variable, depending on the unit type. For instance, the average price of the installation of a heat pump is USD 5,600. As regular maintenance of existing units is a necessity to sustain the Quality of Life (QoL), the high cost hinders market growth, especially in economically constrained areas. Moreover, high prices may drive customers toward cheaper options that may not be as effective.

Product Insights

In 2018, the air conditioner segment accounted for the majority of the market in terms of value and is estimated to register a CAGR of more than 9.0% over the forecast period. The dominant market share is attributed to a high degree of penetration of ACs in U.S. homes. According to the U.S. Department of Energy, three-quarters of all homes in the country have air conditioners. Furthermore, increasing the need to replace these units is anticipated to propel the demand for air conditioners over the forecast period.

Heat pumps are mechanical-compression systems that transfer thermal energy opposite to the direction of heat flow by soaking up heat from a cold environment and discharging it to a warmer one. It uses refrigerants to absorb heat in the evaporator and transfers heat to a cold space. Besides this, heat pumps are highly energy-efficient and emit low CO2 gases into the environment. Owing to the aforementioned properties, the heat pump segment is anticipated to grow substantially in the next few years.

Technology Insights

By technology, the U.S. HVAC systems market includes an inverter and non-inverter technologies. The air conditioner and heat pump segments are further divided into inverter and non-inverter technology types. The U.S. inverter AC market is expected to cross the USD 20 billion mark by 2025.

The U.S. inverter heat pump market is expected to exhibit a CAGR of 12.5% from 2019 to 2025. Heat pump integrated with inverter technology uses the right amount of energy to achieve excellent comfort and optimum operational efficiency with minimum noise. Besides, an inverter heat pump ensures automatic temperature control and prevents damages caused by fluctuation in voltage, thus, reducing overall maintenance and service costs and increasing operational efficiency.

End-use Insights

The market is segmented based on end-user into residential, commercial, and industrial. The residential segment held a market share of approximately 48.0% in 2018. Residential heating, ventilation, and air conditioning units are smaller and simpler compared to their commercial and industrial counterparts. These systems are used in compact places such as homes, small restaurants, and small stores. The increasing popularity of compact household equipment is expected to drive the demand for residential HVAC units.

Variable-speed HVACs are gaining popularity in the residential sector, owing to their longer lifespan as compared to conventional systems. Variable-speed systems keep changing their compressor speed and operate longer on lower fan speed, which helps in reducing humidity. Lower humidity helps in the prevention of mold growth and lower fan speed makes the home environment quieter. Owing to the above-mentioned advantages over conventional systems, variable-speed systems are expected to witness a surge in the residential segment.

The commercial segment is anticipated to expand at a revenue-based CAGR of more than 9.0% over the forecast period. Commercial HVAC units require a significant amount of space and are generally located on the rooftops of buildings such as shopping malls, hotels, big restaurants, theaters, and commercial offices. Awareness regarding the impact of the indoor environment on the way people think, feel, and act has triggered the trend of building wellness. Thus, the demand for HVAC in offices, hotels, and other commercial spaces is expected to grow in the future.

Regional Insights

The south region holds the largest market share and is anticipated to witness the highest growth soon. According to a survey conducted by the U.S. Census Bureau in 2018, the south region comprises the highest number of households, around 48 million, in the U.S. Of these, around 38 million households in the region have an annual income above USD 25,000. This trend of rising annual household income in the region is expected to further stimulate the adoption of HVAC systems over the forecast period.

Additionally, as per the National Association of Home Builders, the overall construction industry in the southern region has grown at a rate of approximately 6.0% from 2017 to 2018. Thus, the flourishing construction industry in this region is aiding the adoption of HVAC systems. The western region is also anticipated to record a healthy growth rate from 2019 to 2025.

Key Companies & Market Share Insights

Market players are increasingly investing in research and development of new technologies such as IoT-enabled HVAC systems. For instance, in 2015, Daikin Industries, Ltd. integrated Intel technology in its rooftop units to deliver its data on the cloud, which will provide remote monitoring and control of the system. This technology helps customers proactively manage the performance of the systems and makes them aware of any imminent issues that the HVAC system may encounter.

Additionally, manufacturers are focusing on catering to increasing demand for environment-friendly systems that use alternative sources of energy. For instance, Lennox International Inc. offers an HVAC system called SunSource, which is powered using solar roof modules. Daikin Industries, Ltd., Carrier Corporation, Electrolux AB, Fujitsu General, Ingersoll Rand, and Rheem Manufacturing Company are some of the key players operating in the market.

U.S. HVAC Systems Market Report Scope

Segments Covered in the Report

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2015 to 2025. For this study, Grand View Research has segmented the U.S. HVAC systems market report based on the product, technology, end-use, and region:

• Product Outlook (Volume, Million Units; Revenue, USD Billion, 2015 - 2025) 

  • Air Conditioners

    • Unitary

    • Rooftop

    • Packaged Terminal AC (PTAC)

  • Heat Pumps

    • Unitary

    • Rooftop

    • Packaged Terminal Heat Pumps (PTHP)

• Technology Outlook (Volume, Million Units; Revenue, USD Billion, 2015 - 2025) 

  • Air Conditioner

    • Inverter

    • Non-Inverter

  • Heat Pumps

    • Inverter

    • Non-Inverter

• End-use Outlook (Volume, Million Units; Revenue, USD Billion, 2015 - 2025)

  • Residential

  • Commercial

  • Industrial

• Regional Outlook (Volume, Million Units; Revenue, USD Billion, 2015 - 2025)

  • South

  • West

  • Midwest

  • Northeast