HVACR Equipment Manufacturers NAICS 3334

Sep 16, 2025 - Air, Ground Source Heat Pumps Gain Market Share in New Homes

• 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.
• The Dodge Momentum Index (DMI) increased 7.5% in August 2025 to 301.4 (2000=100), up from the downwardly revised July reading of 279.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 8.7%, and institutional rose by 5.4%. For the commercial sector, growth in August was led by data centers, warehouses, hotels, service stations, and parking garages. Some institutional spending slowed, including education and healthcare, but remained in positive territory. Dodge’s associate director of forecasting, Sarah Martin, suggested that after several months of uncertainty, project owners and developers are beginning to move ahead, pricing in higher tariff-related costs. Nonresidential building construction planning is an indicator of future HVAC equipment demand.

• Home builder confidence in the single-family market was unchanged in August but remained solidly in negative territory in September, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), remained at 32 in September 2025, unchanged from August’s reading. Any HMI reading over 50 indicates that more builders see conditions as good than poor. Home builder sentiment has been stuck in the 30s since May 2025, but in the most recent survey, builders were optimistic that interest rates would move lower and stimulate demand. The HMI survey also showed that 39% of builders reduced home prices in September to lure potential buyers off the sidelines, although the average price reduction of 5% has remained unchanged since November 2024.
• A budget reconciliation law signed by President Trump in July includes provisions that will prompt an early sunset of tax credits for several types of residential energy efficiency improvements. The Biden-era Inflation Reduction Act (IRA) incentivized homeowners to make energy efficiency upgrades, including purchasing electric heat pump HVAC systems. The tax credits and rebates were set to be in place for 10 years, but the budget reconciliation law of 2025 ends the tax credits at the end of this year. The IRA also made permanent 179D tax deductions for energy efficiency upgrades for commercial buildings, including HVAC. The new law eliminates 179D tax deductions effective June 30, 2026.