HVAC industry enters era of ‘accelerated change’: Report

Financial data company PitchBook on Wednesday dropped a 13-page report on the state of the HVAC industry, covering market trends, private equity activity, and a set of challenges ahead. 

The big picture: While lower than a separate report published in March, PitchBook valued the U.S. HVAC market at $89 billion as of 2024, based on data from Global Market Insights, with the figure projected to hit $130 billion by 2030.

• “[S]tates such as California, Texas, and Florida represent the largest individual markets due to their extreme seasonal climates and large housing stocks,” the company writes.  
• “Electrification policies in the Northeast and Midwest are also spurring new investment in retrofit projects and clean heating upgrades,” it adds. 

Big HVAC: PitchBook counted 55 closed private equity deals across North America and Europe in 2024, up 72 percent from 2023 and 38 percent from 2022, adding that deal activity is on a “strong growth trajectory.”

• But, but, but: The report doesn’t specify how it defines “deals,” making the figure difficult to benchmark. 
• For context, in the U.S. alone, Homepros counted 78 residential contractor acquisitions in 2024, based on public, online announcements, which is likely an undercount since not every acquisition is made public. 

What they’re saying: “Private equity has long been drawn to the HVAC space, and for good reason,” PitchBook writes. “Many HVAC businesses operate with relatively low capital intensity, high-margin service arms, and strong cash conversion, making them ideal candidates for leveraged buyouts or platform builds.”

What to watch: Despite its attractiveness, the industry faces a range of challenging dynamics in the years ahead, including regulatory uncertainty, labor shortages, and margin pressures, according to the report. 

• Case in point: While the U.S. and China have agreed to a temporary tariff reduction, and contractors remain more insulated than manufacturers, both countries have since accused each other of violating the truce, “creating a risk of a further China retaliation in the coming days,” the report notes.

Meanwhile, as dollars pour in, smaller contractors “may struggle to compete with larger vertically integrated players or navigate new technologies without major investments,” it adds. “Inflation, rising labor costs, and more expensive refrigerants are also squeezing margins.”

The bottom line: As the HVAC industry finds itself at the center of investment, policy, and technology conversations, “For investors and operators alike,” PitchBook writes, “[T]his means a traditionally stable industry has entered a period of accelerated change — and opportunity.”

Full report

Editor’s note: Homepros has no relationship with PitchBook.