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Construction Trends Impacting HVAC: Stay Ahead of Market Changes

June 7, 2024

The HVAC industry is experiencing significant changes driven by construction market trends and broader economic factors. Understanding these dynamics is crucial for staying competitive and maximizing growth opportunities in the evolving market.

Construction trends impacting HVAC

The HVAC industry is seeing significant changes influenced by the construction market and broader economic dynamics. Here’s what you need to know to stay ahead.

Construction Trends Impacting HVAC

  1. Housing Market Recovery:
  • Existing Home Sales: The pace of existing home sales has stabilized around 4.1 million units annually. While sales were down 14% from last year, recent trends show improvement, signaling that the market is bottoming out.
  • Inventory Improvement: A shortage of homes on the market was a significant hurdle last year. This year, listings are up 31% nationally in April compared to the same time last year. Increased inventory, especially in the Southeast and Southwest regions, will drive more home sales and subsequently more HVAC installations and replacements.
  1. New Construction:
  • Single-Unit Residential Permits: Permits for new single-unit homes have increased by 9% over the past year. The Southeast and Southwest regions, leading the charge with a 10% increase, are key markets for HVAC demand as new homes will need heating and cooling systems.
  1. Economic Dynamics:
  • Mortgage Rates: Even though mortgage rates are currently near 7%, many homeowners still benefit from lower rates locked in during the COVID-19 pandemic. This has kept consumer spending relatively strong, supporting ongoing investments in home improvements and HVAC replacements.

HVAC Market Dynamics

  1. Shipment Trends:
  • Air Conditioners: Although shipments were down 5% in March 2024 compared to last year, the annual rate projects a 10% growth.
  • Heat Pumps: Shipments dropped 3.5% in March but are expected to increase by 9% annually.
  • Furnaces: Shipments were down 7% in March, but annual projections suggest a 10% increase.
  1. Looking Forward:
  • HARDI reported that conditions seem to be improving: With inflation easing and interest rates expected to decline, the demand for HVAC systems is expected to rise as more homes enter the market and undergo renovations. Among contractors we interviewed, many believe that hte pull forward in demand from in 2021 and 2022 will subside
  • Seasonal Factors: We always see a rise in HVAC demand in the summer. Easier weather comparisons and lower inflation will support demand growth in the latter half of 2024 and into 2025.

Key Takeaways for HVAC Contractors

  • Inventory Management: As demand increases, keeping inventory on hand will be critical again, especially in regions with high growth rates like the Southeast and Southwest.
  • Customer Financing: As rates come down, financing options for your customers may become more compelling, making it easier for them to invest in new HVAC systems.

Service Excellence: You’re always focused on delivering exceptional service. Summer season is no different in building that long-term customer loyalty.