Residential Heating and Cooling Expected to Expand

By Tim Boothroyd, Manager of Product Consulting and Residential Statistics, Dodge Data & Analytics

BEDFORD, MA - December 22, 2017 - U.S. residential heating and cooling unit activity is expected to achieve another year of modest growth in 2018. This is a divergence from the weakness that occurred prior to 2014, as the new construction heating and cooling market remained tentative. According to Dodge Data & Analytics research in the residential new construction and replacement markets, unit demand is expected to rise as much as 5% in 2018 after achieving similar gains in 2017. A steady replacement market, paired with an anticipated increase in new construction, promotes a positive market outlook.

Dodge Data & Analytics annual residential market research reveals gas fueled furnace systems continue to garner the largest unit share with approximately 60% of new homes supporting these types of systems.  Heat pumps also exhibit a significant portion of the market with over 40% market share followed by electric and oil fueled systems.  Air conditioning systems are becoming increasingly popular in new homes.  According to the U.S. Census, 85% of new homes had cooling systems in the year 2000.  This has climbed to a robust 93% of homes in 2016.  Dodge research reveals split condenser systems gained the greatest share of the market in new homes followed closely by self-contained condenser systems.  The aforementioned heat pump share also continues to support cooling in new homes.     

Heating and cooling systems being replaced in existing homes also plays an important role in the market.  Although relatively stable in terms of overall pattern, existing homes serve as a significant base of unit market share.  Dodge Data & Analytics conducts annual research involving homeowners and some interesting trends have emerged.  As in new homes, gas furnace systems achieved a significant incidence of product replacement by homeowners, followed closely by heat pumps.

Interestingly, some small changes also appear to be occurring in the replacement and retrofit market.  Ductless mini split systems are achieving an ever-growing share of the market.  These units are widely accepted as supplemental systems for existing homes without a duct system in addition to being used for additions and multi-family units.  While still a relatively small portion of the heating and cooling market, geothermal energy systems are also showing modest gains.  According to the Green Building Alliance, geothermal energy achieves high praise due to its efficiency and sustainability. Consumers continue to seek improved systems to combat damage to our environment.   

Finally, homeowners’ reasons for replacing heating/cooling systems are worth reviewing.  It comes as no surprise that most replace due to the failure of their existing systems which occupies approximately 65% of responses.  As noted above, a large share of the population also invests for greater energy efficiency.  Indeed, a notable 25% say they replaced systems recently in order to improve efficiency.  The remaining volume of replacements are attributed to supplementing existing systems as well as changing fuel source. 

Overall, the Dodge Research & Analytics’ study looks at many different aspects of the residential heating and cooling market.  U.S. level demand has shown some interesting patterns as consumers continue to educate themselves on the more efficient and clean systems.  Thankfully, the trend in activity has continued to pick up after the lows occurring since the Great Recession of the late 2000’s and is expected to continue to grow in the near term.  



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