U.S. HVAC revenues eclipse $150 billion, report shows

HARDI last week published its annual ‘State of the Channel’ industry report, including over 300 pages of industry trends and data, along with survey responses from over 1,000 contractors nationwide. 

A few takeaways, in the first of a two-part series:

HVAC is a massive industry

As of 2024, roughly 116,000 HVAC and plumbing contractors operate nationwide, per the report, with HVAC contractors — both residential and commercial — generating nearly $160 billion in revenue. 

Additionally, residential contractors purchased $54 billion of HVAC and water heating products last year, up three percent from 2023. 

Online purchasing has gained momentum

According to HARDI’s contractor survey, 46 percent use online marketplaces and digital-first platforms like SupplyHouse.com and Parts Town for purchases, making nearly 11 percent of their purchases through these platforms — a figure that respondents note has increased compared to five years ago. 

And distributors are taking notice

The percentage of online sales in the “Wholesale: Hardware, Plumbing & Heating” category sits at 25 percent, while for HARDI members, per its distributor survey, that number is just four percent. 

“As older contractors age out of the workforce, and newer more digitally minded contractors take their place, HVAC/R distributors will experience increased pressure to adopt or maintain a robust e-commerce presence,” the report notes.

However, HARDI members recognize the shift: 84 percent added that e-commerce is either ‘important’ or ‘very important’ to their companies’ long-term objectives. 

The workforce is getting younger

In 2014, 34 percent of HVAC technicians and installers were under 35 years old, according to the Bureau of Labor Statistics.

Over the past decade, this number has climbed, with those 35 and under now comprising 44 percent of the workforce. 

Demand for HFCs isn’t expected to outpace supply until early 2029

Leading up to 2022, refrigerant producers built up substantial inventories of HFCs. From 2019 to 2021, total HFC supply exceeded the EPA-established “consumption baseline,” with 2021 seeing a 10 percent spike in supply.

Additionally, supply of both HFC-125 and HFC-32, which blend to make 410A, sat at over twice the amount needed to meet demand in 2023, indicating “sufficient supply to meet R-410A demand for the foreseeable future,” the report notes.

“Based on historic HFC demand trends, and a simplified assumption that the installed base of products using bulk HFCs will turnover at a constant pace, the current supply of HFCs appears large enough to sustain demand for the foreseeable future,” it adds. “Our model suggests HFC refrigerants won’t become supply-constrained until the end of 2028.”

Big box retailers aren’t an immediate threat — but are a long-term concern

The report notes that big box retailers command less than two percent of total industry purchases by contractors, however, it adds, “the threat posed by large retail companies will come less from their ability to act as a substitute for wholesale distribution, and more from their ability to leverage their scale [and] resources… to forcefully enter adjacent wholesale markets, like HVAC/R.”

It points to Home Depot’s 2024 acquisition of SRS Distribution, a major roofing supplier, as a “notice of intent for future steps” into different verticals, potentially including HVAC and plumbing.

Ted Decker, Home Depot’s CEO, has confirmed this notion, saying on an earnings call last year, “Driving sales growth with Pro customers remains one of our top focus areas.”