HVAC Industry Trends and Outlook for 2025

You may not be able to look into a crystal ball, but HVAC industry trends might be the next best thing for your HVAC business – they’ll help you see what’s coming and make smart moves for your business.

A good grasp of the HVAC industry outlook can help you explore opportunities to innovate, get ahead of the competition, and future-proof your business.

Keeping up with the latest data also empowers you to prepare for the not-so-pleasant trends (e.g., rising costs of HVAC equipment, labor shortages, etc.) and adjust your strategies accordingly. 

A Better Business Bureau (BBB) report highlights the industry’s growth from $90.3 billion in 2018 to $123.2 billion in 2023. This expansion is driven by technological advancements, regulatory changes, and shifting consumer preferences–trends that HVAC businesses ought to be abreast of. 

In this article, we’ll explore the most impactful HVAC industry trends to help you set your business up to thrive in 2025 (and beyond).

Key Findings

• Energy efficiency drives home buying decisions for 61% of buyers.
• The U.S. Environmental Protection Agency (EPA) will ban refrigerants with high Global Warming Potential (GWP) by 2025.
• HVAC demand shifts from replacements to repairs as economic pressures rise.
• HVAC technician shortage could hit 225,000, leaving 1.8 jobs per worker.

HVAC Industry Outlook 2025: Trends, Growth, and Opportunities

New Construction Trends

According to Zillow, around 23% of U.S. adults plan to buy a home in 2025, but only 5% will succeed due to a limited housing supply.

This gap suggests a strong potential customer base for new construction, benefiting HVAC companies working with builders to install systems in newly constructed homes.

Zillow’s report also highlights a 9% rise in buyers prioritizing energy-efficient homes. This trend signals a growing market for HVAC systems designed with eco-friendly and energy-saving technologies.

Smart Products and Energy Efficiency

Energy efficiency is a top priority for new home buyers, with 61% of respondents ranking it among their top three decision factors. This positions HVAC contractors who offer energy-efficient equipment to meet growing consumer demand effectively.

The importance of smart home capabilities has grown significantly, from 34% of buyers in 2019 to 63% in 2023. This shift supports the increasing integration of HVAC systems with smart home platforms, allowing consumers to control and optimize their indoor environments easily.

Impact of Extreme Weather on HVAC Services

As extreme temperatures become more common, HVAC services have grown by 10% to meet the rising demand for better-conditioned spaces. This trend was particularly pronounced in states like California (863 new HVAC business openings), Florida (860), and Texas (719).

Homeowners choosing to stay in their current residences are investing in HVAC upgrades to improve comfort and energy efficiency. This trend positions HVAC companies to benefit from the rising demand for retrofitting older systems with modern, energy-efficient equipment.

A recent global survey by Daikin revealed that Houston, Texas, leads in air conditioning usage among 12 major cities worldwide. 

• Despite sharing an average maximum temperature of 93.2°F with two other cities, 41% of Houston residents reported running their air conditioners continuously, averaging 17.2 hours per day during the hottest month. 
• The survey also highlighted that energy efficiency is the top priority for consumers when purchasing air conditioners in 11 out of the 12 cities surveyed. 

Shift from HVAC Replacement to Repair

The U.S. residential HVAC market, which boomed during COVID with high replacement rates, is now experiencing a shift toward repairs due to economic pressures like high interest rates and low consumer confidence. 

In 2023, shipments of unitary air conditioners and heat pumps dropped by 16.7%, with gas furnace shipments down 23%. This trend, reflected in market data from HARDI and AHRI, is driven by rising costs and a sluggish home resale market.

Experts emphasize the need for contractors to adapt, focusing on meeting customer needs through repairs rather than replacements. Although replacements typically yield higher profits, service margins can be more stable and profitable in the current climate.

Boost HVAC techs’ productivity with Workyard’s precise time clock

See How it Works

Major Technological Shifts in HVAC

Smart HVAC Control Market Growth Outlook

The global Smart HVAC Control Market, valued at USD 10.56 billion in 2023, is projected to grow to USD 26.80 billion by 2032, with an anticipated CAGR of 10.9% from 2024 to 2032. 

The market growth is driven by the increasing adoption of smart HVAC devices due to their flexibility, mobility, and ability to improve Indoor Air Quality (IAQ), which is crucial for occupant comfort and health. 

Despite challenges such as low awareness in developing economies, IoT integration is expected to open new opportunities for smart HVAC solutions, making them accessible for virtual monitoring and management. 

Market segmentation spans products like smart thermostats and smart air vents, with applications ranging from residential to commercial and industrial settings.

Smart Thermostat Market Growth Forecast

The global smart thermostat market, valued at $1.86 billion in 2019, is expected to soar to $11.36 billion by 2027, reflecting a robust CAGR of 28.00% from 2020 to 2027. 

Smart thermostats are key components in smart infrastructure, integrating with appliances such as window ACs, split and portable ACs, heaters, radiators, and boilers.

These innovative devices offer automated temperature control and scheduling, enhanced by sensors and smart-net technology like Wi-Fi, allowing remote management.

Sustainability and Green Innovations

HVAC Refrigerant Regulations

The US EPA (Environmental Protection Agency) will implement regulations banning refrigerants with a GWP (Global Warming Potential) of over 700 starting January 1, 2025, affecting chillers, heat pumps, and VRF systems.

• Common refrigerants R22 (GWP 1810) and R410A (GWP 2088) are being phased out, creating a demand for low-GWP alternatives.
• R32 (GWP 675) and R454B (GWP 466) are seen as suitable replacements for R410A due to their stability and energy efficiency.
• Natural refrigerants like R717, R744, and R290 have lower GWPs but come with higher flammability risks and require careful handling.
• New regulations will not require immediate changes for existing HVAC systems but may increase the cost of phased-out refrigerants.

DOE Final Rule to Achieve Zero Emissions in Federal Buildings

On April 24, 2024, the U.S. Department of Energy (DOE) announced a new rule under the Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings initiative, which is aimed at reducing carbon emissions in federal buildings. 

The rule mandates a 90% reduction in fossil fuel use for new or renovated projects starting between 2025 and 2029, with full elimination by 2030. 

HVAC in Smart Cities

Buildings account for 40% of global energy consumption and 33% of greenhouse gas emissions, making them essential targets for a lower-carbon future. 

Smart HVAC systems play a crucial role in this shift by leveraging IoT technology to reduce carbon emissions, optimize energy use, and lower operational costs. 

IoT sensors enable condition-based preventive maintenance, allowing real-time data collection, remote diagnostics, and adjustments to system performance, which enhance energy efficiency. 

Smart HVAC solutions also integrate occupancy and thermal sensors for dynamic temperature control, reducing energy consumption by adapting to real-time building use.

Solar Air Conditioning Market Outlook

The global solar air conditioning market, valued at USD 2.52 billion in 2023, is anticipated to grow to USD 8 billion by 2032, with a projected CAGR of 13.7% from 2024 to 2032. This growth is driven by the rising demand for energy-efficient cooling solutions and the push for green buildings and sustainable infrastructure. 

Solar air conditioning systems, which use solar energy to cool buildings, help reduce energy costs and alleviate power grid stress, particularly during peak summer months.

Supportive government policies, including tax credits, subsidies, and grants, are further propelling market expansion by making solar AC systems more accessible to both consumers and businesses.

Advanced Sustainable HVAC Technologies

Innovations in HVAC are focusing on eco-friendly solutions that dramatically improve energy efficiency and reduce carbon emissions. Here are some of the leading technologies making an impact:

a. Geothermal Heat Pumps

The most energy-efficient HVAC option, operating at 400% efficiency and offering up to 70% energy savings. Ideal when combined with renewable energy like solar power, despite high installation costs ($10,000-$30,000).

b. DeVap (Green Air Conditioning)

This system uses desiccant-based technology that cuts electricity use by up to 90% and eliminates harmful refrigerants; currently aimed at commercial markets.

c. Hydronic Radiant Heating and Cooling

A system that runs heated or cooled water through pipes beneath floors or ceilings, offering 30% higher energy efficiency than traditional forced-air systems. Works best with sustainable energy sources like geothermal or solar thermal systems.

d. Passive Solar Heating

Utilizes natural sunlight for home heating, reducing the need for electrical heating. Requires strategic home design with south-facing windows and thermal mass materials for effective heat absorption and distribution.

e. Smart Thermostats

Wi-Fi-enabled smart thermostats allow users to remotely monitor and adjust home temperatures, saving between 15-23% on energy bills. Equipped with sensors and programmable features, these devices optimize energy use by automatically adjusting temperatures based on room occupancy and pre-set schedules.

Emerging Innovations in HVAC Technology

The U.S. Department of Energy’s Building Energy Research and Development program is spearheading innovative projects aimed at drastically reducing HVAC energy use. Here are some of them: 

• Optimized Thermal Systems in Maryland is creating a heat exchanger with 90% fewer joints to cut refrigerant leaks
• The University of Florida is combining water heating, dehumidification, and cooling in a single system for better energy efficiency. 
• Dais Analytics, partnering with ORNL (Oak Ridge National Laboratory), is developing a membrane-based rooftop A/C that uses water as a refrigerant, potentially saving 30-50% in energy. 

Heat Pump Installations to Quadruple by 2030

• The U.S. Climate Alliance and the Biden administration have pledged to boost heat pump installations from 4.7 million to 20 million by 2030.
• Supported by a 30% tax credit under the Inflation Reduction Act and further state incentives, heat pumps are becoming a popular alternative to gas furnaces. 
• With buildings accounting for over 30% of global emissions, this initiative is part of broader efforts to reach net-zero emissions by 2050.

Challenges and Strategic Considerations for HVAC Business Owners

HVAC Technician Shortage

The U.S. HVAC industry currently faces a significant workforce gap, with 290,000 technicians and 110,000 unfilled positions—38% short of what’s needed. 

With 23,000 workers leaving the industry annually, projections indicate the shortage could reach 225,000 technicians within five years, resulting in 1.8 open jobs for every available technician. 

To retain workers amidst fierce competition, HVACR companies must prioritize a career path, a sense of belonging, work-life balance, and opportunities for personal growth.

Flexibility is crucial, such as accommodating schedules for family commitments. Employers should also invest in training, certifications, and access to advanced tools to encourage professional development. 

Retaining older workers through adjusted roles or part-time positions can further help alleviate shortages.

Biden-Harris Administration’s Workforce Investments

The Biden-Harris Administration’s substantial investment in workforce development, including the largest-ever federal commitment to Registered Apprenticeships, is set to benefit sectors like HVAC. 

With over $244 million directed to modernizing and expanding apprenticeship systems, this initiative aims to bridge skill gaps and prepare workers for in-demand, well-paying jobs.

For the HVAC industry, which is already facing a significant technician shortage, these actions offer a critical opportunity to attract new talent and build a skilled workforce. 

Rising HVAC Equipment Costs 

Since 2020, HVAC equipment prices have increased by about 40%, with the average system price nearly doubling from $6,000 to around $12,000 – largely due to supply chain disruptions, rising raw material costs, and labor shortages.

Major HVAC manufacturers like Lennox, Carrier, and Trane have acknowledged these price adjustments, citing factors such as the cost of new components, raw materials like copper and aluminum, and inflation-driven labor expenses.

Boost HVAC techs’ productivity with Workyard’s precise time clock

See How it Works

Mandatory Refrigerant Change and Its Impact on Prices

The American Innovation and Manufacturing (AIM) Act of 2020 mandates a phasedown of hydrofluorocarbons (HFCs) to reduce their environmental impact. 

As part of this initiative, starting January 1, 2025, all new residential air conditioners and heat pumps in the United States will be required to use A2L refrigerants, which have a lower global warming potential (GWP) compared to current refrigerants like R-410A. This leads to an expected price increase of at least 20%.

A2L refrigerants, such as R-454B and R-32, are classified as mildly flammable but are considered safe when handled and installed correctly. Their adoption necessitates updates to HVAC equipment designs and installation practices to ensure safety and compliance with new standards.

How Inflation is Changing Home Cooling

• With inflation high and summer temps on the rise, 77% of Americans are adjusting their cooling habits, according to a DuraPlas survey. 
• While most aim to keep their homes at a cool 70 degrees, many are turning to alternatives like keeping blinds closed (45%), using fans more (40%), and opening windows at night (30%). 
• This shift highlights a mix of cost-saving strategies and HVAC reliance, though maintenance gaps put systems at risk during peak usage.

The Future Outlook for the HVAC Industry

U.S. HVAC Industry Growth Outlook

The U.S. HVAC services market is on track for significant growth, with its value projected to rise from $25.6 billion in 2019 to $35.8 billion by 2030. 

The market is also anticipated to achieve a compound annual growth rate (CAGR) of 9.7% between 2019 and 2025, driven by factors such as increased demand for energy-efficient systems and expanding residential and commercial construction.

Job Outlook for HVAC Technicians

Employment for heating, air conditioning, and refrigeration mechanics and installers is expected to grow by 9% from 2023 to 2033, outpacing the average for all occupations.

This growth will result in approximately 42,500 job openings each year, driven primarily by the need to replace workers who transition to different careers or retire from the workforce.

Employment Growth in HVAC

The expansion of commercial and residential construction is set to drive employment growth for HVAC technicians, along with the increasing use of advanced climate-control systems. 

Repair and replacement work forms a significant portion of an HVAC technician’s duties, and the push for energy efficiency and pollution reduction is expected to further boost demand as systems are retrofitted, upgraded, or replaced.

Wrapping Up

HVAC industry trends are your roadmap for future success. By staying on top of advancements like smart HVAC systems, sustainable practices, and evolving customer needs, you position your business to adapt, grow, and meet the challenges ahead. 

As you may have noticed, the HVAC industry evolves with technology–either you adapt or die. HVAC products should keep up with the market demands–but so should business management software to keep HVAC teams running efficiently. 

HVAC management software like Workyard helps streamline job tracking, optimize scheduling, and keep project costs in check, allowing you to focus on what you do best—serving your customers and growing your business. 

Explore how Workyard can help you stay ahead of trends (and your competition) by trying it free for 14 days today.