HVACR Equipment Manufacturers
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 1,400 HVAC and refrigeration (HVACR) equipment manufacturers in the US produce and sell heating, ventilation and air conditioning systems for residential and nonresidential buildings, as well as commercial and industrial refrigeration and freezer equipment. Firms may also sell commercial and industrial fans and blowers and air purification equipment.
Dependence on Construction Activity
Demand for HVAC and refrigeration equipment is driven by new residential and commercial construction activity.
Energy Efficiency Regulations
HVACR equipment manufacturers are forced to keep up with evolving regulations to promote energy efficiency.
Industry size & Structure
The average HVAC and refrigeration equipment manufacturer operates a single plant, has 105 employees, and generates about $35 million in annual revenue.
- The HVAC and refrigeration equipment manufacturing industry consists of about 1,400 companies, employs 148,000 workers and generates $49 billion annually.
- The industry is somewhat concentrated, as the 20 largest companies represent 53% of industry revenue.
- Large companies include Carrier Corporation, Goodman (part of Daikin Group of Japan), Trane (part of Ingersoll-Rand), Johnson Controls, Lennox International, and Rheem.
Industry Forecast
HVACR Equipment Manufacturers Industry Growth
Recent Developments
Sep 19, 2024 - Nearly All New Homes Have Central AC, Heat Pumps Gain Ground
- According to the US Census Bureau’s Survey of Construction, 98% of single-family homes that began construction in 2023 have a central AC system, up from 97.1% in 2022 and 85.5% in 2000. New homes with AC are concentrated in the South, with 100% of homes having AC in the South Atlantic, East South Central, and West South Central regions. Homes in the West North Central and Pacific regions both have central AC at the national rate of 98%. Regions with lower rates of having AC include the Middle Atlantic (95%), East North Central (94%), Mountain (93%), and New England (89%). As for heating systems, between 2000 and 2023, the share of new homes with an air or ground-source heat pump as the primary heating source grew from 23% to 45%. Over the same period, new homes with forced air heating systems without heat pumps fell from 71% to 53%.
- At its meeting in September, the Federal Reserve voted to reduce interest rates by half a percentage point, which would put the benchmark federal funds rate between 4.75% and 5%, according to The Wall Street Journal. Projections of fed officials’ moves suggest another four quarter-point cuts will come next year, which would bring the federal funds rate down to 3.5% by the end of 2025. However, it’s unclear to what extent September’s cut will affect housing demand. Mortgage applications were flat year-over-year in September. Meanwhile, for the week ending September 12, the average fixed-rate 30-year mortgage rate was 6.2%, down from 7.18% a year earlier, according to Freddie Mac. Even as mortgage rates have dropped, high home prices and other costs, including homeowner insurance, continue to weigh on affordability.
- High interest rates have increased the costs for new multifamily construction and reduced property values, prompting some developers to halt or delay projects, according to The Wall Street Journal. Multifamily housing starts involving five or more units fell 21.8% in July compared to July 2023 and were down 41% from their April 2022 peak. The drop in starts follows a boom in apartment building that began during the pandemic. This year, about 610,000 apartment units are expected to come online, the most in any year since the 1980s, according to data firm CoStar. However, as financing new projects has become costlier, CoStar expects new apartment supplies to slip to fewer than 350,000 units in 2025 and 275,000 in 2026. The influx of new apartment building has created an oversupply in some regions, leading to lower property values and weak rent growth, which has reduced developer and investor appetite for new projects.
- The number of building permits issued for single-family, privately-owned housing units, a demand driver for building inspection services, increased 2.8% month-over-month but declined 0.5% year-over-year in August 2024. Single-family housing starts grew by 15.8% month-over-month and increased 5.2% year-over-year in August. Single-family housing completions dropped 5.6% month-over-month but grew 8.4% year-over-year in August. The August rise in housing starts was helped by moderating interest rates, but builders still face supply-side headwinds, including labor and lot shortages and stubbornly high prices for some types of building materials, according to the National Association of Home Builders (NAHB).
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