HVAC & Plumbing Contractors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 105,000 HVAC and plumbing contractors in the US provide installation, repair, and maintenance services for air handling and water management systems. Just over 60% of HVAC and plumbing contractors are solo operators. Contractors may specialize in residential, commercial, institutional, or industrial service.
Dependence On Construction Industry
Demand for HVAC and plumbing services is highly dependent on trends in the construction industry.
Increasing Sophistication Of HVAC Systems
Demand for improved efficiency in the non-residential market has led to increasingly complex HVAC systems and automated monitoring programs.
Industry size & Structure
The average plumbing and HVAC contractor employs 11 workers and generates about $2 million in annual revenue.
- The HVAC and plumbing contractor industry consists of 105,000 companies (including solo operators), employs more than 1.2 million workers and generates $218 billion annually.
- Just over 60% of HVAC and plumbing contractors are solo operators and generate about $65,200 annually.
- Major customer segments include single family homes (20% of industry business), office buildings (10%), manufacturing and industrial buildings (5%), educational buildings (8%), commercial buildings (7%), health care and institutional buildings (6%), and apartment buildings (4%).
- Large companies include EMCOR Group, Comfort Systems USA, Johnson Controls, and ARS Rescue Rooter.
Industry Forecast
HVAC & Plumbing Contractors Industry Growth
Recent Developments
Oct 14, 2024 - Home Buyers Prefer HVAC-Related Tech Features
- The recent What Home Buyers Really Want Study by the National Association of Home Builders highlights some home technologies that enhance energy efficiency that are most attractive to prospective home buyers. Study participants were given a list of 19 technology features and were asked to rate each as essential, desirable, indifferent, or do not want. Some of the top energy-efficiency tech features were related to HVAC systems, including programmable thermostats (78% of buyers ranking desirable or essential), multi-zone HVAC systems (68%), and energy management systems/displays (61%).
- For the tax year 2023, about 2.3 million tax returns utilized the Energy Efficient Home Improvement credit (25C tax credit) under the Inflation Reduction Act (IRA) of 2022, according to the Internal Revenue Service’s (IRS) most recent clean energy tax credit statistics. The 25C tax credits, which are based on 30% of the improvement’s cost, help homeowners pay for qualifying energy-efficiency improvements to their primary or secondary residences. Some of the credits are for HVAC and plumbing upgrades, including heat pumps ($2,000 annual credit limit), heat pump water heaters ($2,000), efficient AC units ($600), efficient furnaces/boilers ($600), and efficient water heaters ($600). The credits are available until 2032, and the combined annual maximum credit is capped at $3,200. The 25C credit can be used to help cover the purchase and installation costs for heat pumps; heat pump water heaters; efficient AC units, furnaces and boilers; and efficient water heaters.
- New single-family home sales fell 4.7% month-over-month but were up 9.8% year-over-year in August 2024, according to the US Department of Commerce. Some potential home buyers stayed on the sidelines ahead of an anticipated interest rate cut, according to the National Association of Home Builders (NAHB). In mid-September 2024, the Federal Reserve announced a half-percentage point rate cut. The NAHB suggests home builder sentiment is improving amid expectations that the Fed’s credit-easing cycle will continue. However, falling interest rates may increase competition between home builders and existing homeowners who’d previously felt locked in by their low interest rates.
- North American construction and engineering spending in 2024 is expected to grow by about 5%, according to FMI’s fourth-quarter 2024 North American Engineering and Construction Outlook. With growth of 29%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), amusement and recreation (10%), transportation (5%), educational (4%), and religious (2%). Commercial construction spending is expected to decline 8% in 2024 amid weaker demand for warehousing space. Lodging construction spending is forecast to drop 6%, and stubbornly high office vacancies will continue to weigh on new office construction, which is projected to see spending rise by 1% in 2024. Despite favorable demographic trends, project delays for some private hospital developments will cap healthcare construction spending growth at 1% in 2024. Amid moderating interest rates, single-family construction spending is forecast to rise 5% in 2024 as new home affordability remains competitive with existing home prices. Multifamily spending is expected to decline by 4% in 2024 amid a recent wave of fresh inventory. The rise in available apartment units has contributed to flat or falling rents in some metros, prompting developers to pause new projects.
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