North America Residential Unitary HVAC Market Analysis

North America Residential Unitary HVAC Market Analysis

The market by product type is segmented into air conditioning equipment, ducted heat pumps/ packaged terminal heat pumps (PTPHS), variable refrigerant flow (VRF) systems, packaged heating & cooling unit, and others such as air handlers, gas furnaces, evaporator coils, etc. The air conditioning equipment segment dominated the market, generating a revenue of USD 3 billion in 2023 and is projected to reach USD 4.9 billion by 2032.

The split air conditioning (AC) systems segment, including both ducted and ductless units, continues to dominate the North America residential unitary HVAC market. According to a report by Freedonia Group, the demand for split AC systems in the U.S. is projected to grow at an annual rate of 4.2% through 2024, driven by factors such as new housing construction and the replacement of older, less efficient units. The increasing popularity of ductless mini-split systems, particularly in urban areas and renovations, is also contributing to this segment's growth.
 

Based on the installation type the North America residential unitary HVAC market is classified into new construction and replacement/retrofit. The new construction segment dominated the market, generating a revenue of USD 4.1 billion in 2023 and is poised to cross USD 6.3 billion by 2032, driven by the burgeoning housing market.

This growth reflects the increasing focus on energy efficiency in modern building codes and the desire of homeowners for advanced climate control systems from the get-go. Manufacturers are responding by developing HVAC units specifically designed for new construction, often featuring high-efficiency ratings and smart technology integration. For instance, high-efficiency HVAC systems with SEER ratings of 16 or higher are increasingly being specified in new residential constructions.
 

New construction projects have traditionally been a significant driver of demand in the residential HVAC market. The trend in new construction installations is closely tied to housing starts and overall construction activity.
 

According to data from the U.S. Census Bureau, housing starts in the U.S. reached 1.55 million units in 2023, highlighting a robust market for new residential buildings. This trend is expected to continue, with new construction accounting for a substantial portion of the North America residential unitary HVAC market. A study by AHRI (Air-Conditioning, Heating, and Refrigeration Institute) estimates that approximately 60% of HVAC equipment sales in the residential sector are attributed to new construction projects.  
 

Based on the distribution channel the North America residential unitary HVAC market is categorized into direct sales and indirect sales. Indirect sales dominate this market, accounting for 69% of the market share in 2023, and is slated to surpass USD 7 billion by 2032. Indirect sales channels involve manufacturers selling their products through a network of distributors, wholesalers, and HVAC contractors. This approach offers wider market reach and often translates to more competitive pricing for consumers.

Within the indirect sales channel, the wholesale distribution network plays a crucial role. HVAC equipment wholesalers and distributors have established robust logistics and supply chain networks, enabling them to efficiently reach contractors, installers, and retailers across North America. A report by the Heating, Air-conditioning & Refrigeration Distributors International (HARDI) revealed that the combined sales of HVAC equipment and supplies by its member distributors in the U.S and Canada reached $55.6 billion in 2021.
 

Additionally, contractors and installers are critical partners in the indirect sales channel, as they often serve as the primary point of contact for homeowners seeking HVAC system installations or replacements. Manufacturers and distributors actively cultivate strong relationships with local contractors and installers through training programs, marketing support, and incentives. According to a survey by the Air Conditioning Contractors of America (ACCA), over 80% of residential HVAC installations in North America are carried out by professional contractors or installers.

The U.S. dominates the North American residential unitary HVAC market, accounting for 69.6% in 2023. This dominance is primarily driven by the sheer size of the U.S. population and its diverse climate zones.  Warmer southern regions naturally experience a higher demand for air conditioning, while colder northern areas require efficient heating solutions. This variety fuels a market for a wider range of HVAC system types. The residential unitary HVAC industry in the U.S. is robust and dynamic, driven by several key trends. Firstly, there is a strong emphasis on energy efficiency.

The U.S. Department of Energy (DOE) has implemented stringent energy efficiency standards for HVAC systems, which has led to increased adoption of higher SEER-rated units. The residential construction sector and existing home sales play a crucial role in shaping the demand for HVAC systems in the U.S. market.

According to data from the U.S. Census Bureau, new privately-owned housing starts in the country reached 1.55 million units in 2022, representing a 3.8% increase from the previous year. Additionally, the National Association of Realtors reported that existing home sales in the U.S. totalled 6.12 million in 2022, indicating a strong demand for HVAC replacements and upgrades.
 

While smaller in comparison to the U.S. market, the Canadian residential unitary HVAC market is also experiencing steady growth. The Canadian residential HVAC market was valued at $1.98 billion in 2023 and is projected to reach $3.3 billion by 2032, growing at a CAGR of 5.7% during the forecast period. This growth is driven by factors such as the replacement of aging HVAC systems, increasing emphasis on energy efficiency, and government incentives for energy-efficient home renovations.