HVACR Equipment Manufacturers NAICS 3334

Mar 18, 2026 - Homebuilder Confidence Remains Low

• Home builder confidence in the single-family market rose slightly in March, but builders remain concerned about housing affordability, higher construction costs, and shortages of buildable lots and labor, 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 38 in March 2026. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI survey also showed that 37% of builders reduced home prices in March to lure potential buyers off the sidelines, although the average price reduction of 6% remained unchanged from February. While the war in Iran and resulting higher oil prices could pose additional challenges, recent executive orders by President Trump aimed at reducing regulatory hurdles to homebuilding are seen as a positive step. Home building is a key driver of HVAC equipment demand.
• Single-family housing starts fell 2.8% month over month and 6.5% year over year in January. The Census Bureau report was delayed by the government shutdown late last year. The number of building permits issued for single-family, privately-owned housing units fell 0.9% month-over-month and dropped 11.6% year-over-year in January 2026. Homebuilders have faced several headwinds, including tariffs that have increased the cost of key inputs like lumber and cabinets, and labor shortages, according to Reuters. While interest rates have fallen in 2026, the US war with Iran is pushing oil prices higher, along with US Treasury yields. Mortgage rates could begin to rise again because they are tied to the benchmark 10-year Treasury yield.

• Weak nonresidential building construction activity may soften demand for HVAC equipment. Construction spending for nonresidential buildings is expected to remain sluggish in 2026 and 2027, according to the latest American Institute of Architects’ (AIA) Consensus Construction Forecast. Spending on nonresidential building construction is expected to rise 1% in 2026 and 2.2% in 2027. Through 2027, commercial facility growth will be led by data centers, with spending increasing 26.3% in 2026 and 16.5% in 2027. However, offices are expected to see a sharp decline in spending over the forecast period, while warehouse and retail will see weak growth this year and modest gains in 2027. Manufacturing construction spending will fall 3.9% in 2026 and drop 2.8% next year. Spending on institutional projects will grow 2.7% this year, and 2.8% in 2027, led by steady growth in the health sector, but educational, and amusement and recreation project spending will be flat.
• US construction spending on HVAC materials is expected to post solid annual growth in 2026, according to FMI's most recent Building Products Market Overview report. In 2026, residential HVAC spending is forecast to increase by 4.4% over 2025, while 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 demand for new construction and retrofits. Wider adoption of high-efficiency heat pumps is also a tailwind for the HVAC industry. Residential HVAC equipment spending is forecast to rise another 5.1% in 2027 and 6.2% in 2028. Nonresidential HVAC spending is projected to increase by 3.8% in 2027 and 4.7% in 2028.