HVAC & Plumbing Contractors NAICS 238220

Oct 9, 2025 - Homebuilders Reduce Volume to Preserve Margins

• HVAC and plumbing contractors may see a reduction in subcontracting work for new single-family homes as some homebuilders pull back to protect profit margins. In their recent quarterly reporting, homebuilders KB Homes and Lennar reported lower third-quarter profits as high mortgage rates and economic uncertainty keep buyers on the sidelines, according to The Wall Street Journal. The homebuilding industry is hopeful that lower interest rates will bring in new buyers. Still, some industry observers suggest softness in the US job market could prolong a comeback for the US housing sector. In its third-quarter reporting, KB Homes cut its full-year guidance to $6.1 billion to $6.2 billion, down from its Q2 estimate of $6.3 billion to $6.5 billion.
• Demand for building design services rose slightly in August from the prior month, but design demand remained in negative territory, according to a September report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 47.2 compared to July’s reading of 46.2. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries dropped to 50.3 in August from 53.4 in July, and the index for the value of new design contracts decreased from 47.9 to 47.2. August marked the 18th consecutive month of decline for new design contracts, the longest slump in the 15 years the AIA has collected data. However, the AIA’s Chief Economist, Kermit Baker said, "While business conditions remained soft at architecture firms nationally, there are signs that the downturn may be bottoming out. Inquiries for new projects have increased four straight months, and billings both at firms with a multifamily or commercial/industrial specialization are beginning to stabilize."

• New single-family home sales rose 20.5% month-over-month and 15.4% year-over-year in August 2025, according to the US Census Bureau. August’s new home sales reached 800,000 units, the highest number since January 2022. However, some economists told Reuters that the August new home sales numbers are probably inflated and may be revised downward later this year. Other housing bellwether metrics, including builder sentiment and job growth, don’t suggest a sudden surge in new home sales. However, falling interest rates could revitalize the sluggish housing market. The Federal Reserve cut its benchmark overnight interest rate from 4.25% to 4.0% on September 18 amid a tepid labor market, and the central bank is expected to announce more cuts before the end of the year.
• Between 2000 and 2024, the share of new single-family homes that use an air or ground source heat pump for primary heating rose from 23% to 47%, according to the US Census Bureau’s Survey of Construction. Over the same period, new homes that use forced air systems for heating fell from 71% to 50%. Air or ground heat pumps are more popular in warmer parts of the country, as they can become less efficient in colder climates due to a lack of ambient heat. In 2024, air or ground heat pumps accounted for 82% of heating in new homes started in the South Atlantic region and 77% in the East South Central region. Heat pumps accounted for only 7% of heating systems for homes started in the East North Central and West North Central regions.