Homeowners frequently face the dilemma of whether to repair or replace items, a decision that significantly affects HVAC contractors’ businesses. The residential HVAC sector experienced a surge in replacements during the COVID pandemic. However, a notable shift toward repairs has been observed in 2023 and early 2024, a trend that HVAC contractors should monitor closely in their operations.
HVAC Repair Data Trends
Data from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) reveals a 16.7% decrease in unitary air conditioner and heat pump shipments in 2023 compared to the previous year, with gas furnace shipments dropping by 23%. Industry expert Matt Michel notes that excluding new construction, the replacement market has weakened, with a roughly 5% decline in housing starts impacting the market for air conditioners and heat pumps.
Heating, Air-conditioning, & Refrigeration Distributors International (HARDI) corroborates these findings. Tim Fisher, HARDI’s market intelligence director, mentioned a visible shift toward repairs, supported by FieldEdge data on invoices and quotes, which indicate market trends. Despite a slump in replacement trends in 2022, 2023 showed some positive signs, though the expectation is that the repair versus replace dynamic will largely remain unchanged in 2024.
Contributing Factors
Several factors contribute to this shift, including rising costs of HVAC systems and housing. ACCA CEO Bart James emphasizes the need for contractors to adapt and offer solutions that address immediate customer needs, noting changes in consumer spending habits and their impact on the home improvement market.
The slowdown in the home resale market is another factor influencing the repair trend, as home improvement spending often correlates with home sales. Fisher anticipates a gradual improvement in home sales throughout 2024, which could influence HVAC market dynamics.
The cyclical nature of the HVAC industry is also a factor, with historical shipment trends affecting current market conditions. Michel advises contractors to capitalize on the repair market, emphasizing the higher margins in service compared to replacements.
Outlook of the HVAC Repair Market in 2024
Contractors are encouraged to adopt strategies such as offering financing options, maintaining competitive pricing, educating homeowners on the benefits of system replacement, emphasizing value, offering maintenance packages, and diversifying services to navigate the shifting market and sustain their businesses effectively.
