HARDI report sizes up HVAC, plumbing markets

HARDI has released its annual State of the Channel report, a 227-page document including the latest on the HVAC and plumbing markets, the competitive landscape, and legislative activity, as well as survey responses from contractors and distributors nationwide. 

What’s happening: Across the U.S., there are roughly 143,000 and 161,000 contracting businesses primarily operating in the HVACR and plumbing industries, respectively, HARDI noted — figures that include both residential and commercial firms. In 2025, their estimated combined total U.S. revenues exceeded $327 billion.

• Of those revenues, 95 percent were generated by multi-technician firms, with the remaining five percent by non-employer and owner-operator firms, despite the latter representing more than 60 percent of all contractor businesses, per the report. 
• More than 330,000 plumbers, pipefitters, steamfitters, and over 290,000 HVACR technicians and installers are employed in the two industries. 

Zoom in: From 2020 through 2025, annual contractor purchases of residential HVAC products climbed eight percent a year. “The residential water heater market also has seen strong growth, but at a moderately slower pace — up 3.5 percent annually in the same period,” HARDI writes.

• Meanwhile, a 2025 report published by the Joint Center for Housing Studies found that recent home movers, on average, spent 1.4 times more than non-movers on home improvements, including HVAC, over a 20-year period. 

What they’re saying: “The average rate for a 30-year fixed-rate mortgage was 6.7 percent through most of 2024 and 2025, but it has drifted lower in recent months,” the report notes. “With the Federal Reserve expected to continue moving short-term interest rates toward a neutral, less restrictive level, many housing market observers expect existing home sales to stage a strong, double-digit rebound in 2026.”

Go deeper: Through July 2025, President Trump’s trade policies “resulted in an effective tariff rate of 14 percent for all HVACR-related product categories,” HARDI writes. “However, there is reason to believe that manufacturers and suppliers absorbed some portion of the tariff costs and spared customers the pain of a 100 percent cost pass-through.”

• Yes, but: As the tariff landscape “appears more settled,” it says, the association expects manufacturers and suppliers this year to pass along a larger share of those higher import costs.
• “Higher industry price levels will serve as a headwind for sales growth during the year, and will likely drive consumers toward system repairs, where possible, and a more broad-based preference for base efficiency systems,” it adds.

Looking ahead: On an inflation-adjusted nationwide basis, HARDI projects residential sales to range from down one percent to up five percent in 2026, with a base case of up two percent. 

• “We project real growth of approximately 2 percent, with downside risk if affordability and price pressures further restrain replacement activity, and upside potential if declining mortgage rates unlock a stronger-than-expected recovery in existing home sales and remodeling activity,” the report notes. 

Between the lines: “The 2% base case is effectively a volume projection, or sales growth if you exclude the benefit of price increases this year,” HARDI’s Tim Fisher told Homepros in an email. “Distributor and contractor sales move in lockstep, so I’d consider this an outlook for both distributors and contractors.”

What we’re watching: A “rumor” that the EPA will move air conditioners and heat pumps to below 500 GWP in 2029 is “baseless,” HARDI says, adding that there is no such planned or proposed transition. 

• However, “A second transition may still be required if refrigerants are not recovered at the end of life and leak rates remain high. The supply of HFCs is set, and current demand exceeds supply,” it adds. 
• “Once the current glut of refrigerant inventory is used up, severe shortages will persist if recovery rates do not increase and high demand from excess leaks is not decreased.”

The full report is available for purchase