HVAC & Plumbing Contractors NAICS 238220

Jan 10, 2026 - HVAC, Plumbing Spending to Rise

• US construction spending on HVAC and plumbing materials is expected to post solid annual growth in 2026, according to FMI's most recent Building Products Market Overview report. In 2026, spending on residential HVAC is forecast to increase by 4.4% over 2025, and nonresidential HVAC spending is projected to grow by 2.7% over the same period. HVAC spending is being driven in part by updates to energy efficiency codes for equipment, which will boost demands for new construction and retrofits. Wider adoption of high-efficiency heat pumps is also a tailwind for the HVAC industry. Spending on nonresidential plumbing materials is projected to increase by 2.7% in 2026; residential plumbing spending is expected to rise by 0.3%. High copper prices are accelerating the shift to alternative plumbing product materials, including PVC and PEX, which offer lower material and labor costs during installation.
• Home builder confidence in the single-family market increased in December but remained solidly in negative territory as builders face ongoing headwinds, including high construction costs, tariffs, and economic uncertainty, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose one point to 39 in December 2025. Any HMI reading over 50 indicates that more builders see conditions as good than poor. Builder confidence readings remained below 50 for every month in 2025 and were in the high 30s in the fourth quarter. The HMI survey also showed that 40% of builders reduced home prices in December to lure potential buyers off the sidelines, and the average price reduction was 5%, down one percentage point from November.

• Demand for building design services declined in November from the prior month, marking the thirteenth consecutive month of weak architectural billings, according to a December report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 45.3 compared to October's reading of 47.6. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 51.4 in November from 54.8 in October, and the new design contracts index dropped to 42.7 from 47.1. The AIA’s Chief Economist, Kermit Baker said, "Weakness in business conditions at architecture firms continues to be widespread, with declining billings across all major specializations and in every region except the Midwest. However, inquiries for new projects continued to increase, and design activity at firms in the Midwest – a region that traditionally has had a disproportionate share of manufacturing activity – appears to have hit its bottom for this cycle and is expected to continue to improve."
• Fitch Ratings reports that direct lenders’ growing preference for stable, non-cyclical businesses has led to a sharp increase in investment in HVAC services, with representation in Fitch’s portfolio rising 1,050% since 2021. The surge reflects lenders’ search for predictable cash flows, but it also exposes the HVAC industry to risks tied to inflated private market valuations and high leverage. Unlike publicly traded peers in other sectors, HVAC service providers lack transparent valuation benchmarks, making recovery prospects uncertain if market multiples reset. Fitch warns that private equity sponsors may abandon struggling companies when equity cushions shrink, thereby increasing the severity of loss risks for creditors. While HVAC services benefit from steady demand, the sector’s rapid expansion in private credit highlights both opportunity and vulnerability, as lenders and investors could face significant challenges if the current valuation bubble bursts or financing conditions tighten.