Carrier residential sales, unit volume plunge amid destocking

Carrier on Tuesday reported a 30 percent year-over-year drop in its American residential sales during the third quarter, driven by a 40 percent decrease in unit volume.

What’s happening: Residential orders “were impacted by last year’s elevated pre-ordering related to the refrigerant transition,” CFO Patrick Goris said on the company’s earnings call Tuesday. 

• The results follow CEO David Gitlin’s comments in mid-September, when he noted that North American residential volumes would be down roughly 40 percent in the quarter. “The actual impact was consistent with that,” he added.

Zoom in: Asked to share consumer observations, “When we talk to our distribution partners, they do not see an outsized growth on discrete part sales, compressors, or other key components where that would be indicative of a repair versus replace [environment],” Gitlin said. 

• “Having said that, it’s hard not to imagine that there are more consumers opting for repair over replace,” he added, “and we’re hearing some sporadic pickup of that in certain locations.” 

Yes, but: Carrier’s American commercial sales grew 30 percent year-over-year during the quarter, driven by the company’s “largest order ever,” by a hyperscaler, as well as a deal with a major U.S. homebuilder. 

• “Data centers remain a top priority for us,” Gitlin explained. “We remain on track to double our sales from $500 million last year to $1 billion this year.”

What they’re saying: Carrier expects a similar 40 percent year-over-year residential volume decrease in the fourth quarter, amid “continued significant headwinds,” according to Goris. 

• However, “We expect to end 2025 with [American residential] destocking behind us,” he said, echoing a similar outlook by Lennox CEO Alok Maskara, who remarked last week that 2026 would be “brighter” as inventory levels normalize. 
• “We are taking a lot of actions to get field inventory… at a level where we feel like destocking should not be a further headwind as we go into next year,” Gitlin added.

Of note: The company is planning to announce a mid-single-digit price increase in the coming weeks, according to Gitlin.

What we’re watching: “When people buy new homes, our experience is that usually 20 to 25 percent of the time, that results in a change to their HVAC system,” Gitlin noted.

• “Interest rates hopefully will decline, and that should help both new home construction and the sale of existing homes,” he added. 
• “And I think those that have been opting to do some level of repair over replace, there will be pent-up demand there.”