Featuring 53 tables and 74 figures – now available in Excel and Powerpoint! Learn More
This study examines the global residential HVAC equipment industry. Demand for residential HVAC equipment is segmented by product and global geographic region. Historical data (2010, 2015, and 2020) and forecasts for 2025 and 2030 are presented in current US dollars (including inflation) at the global, regional, and country regions.
For the purposes of this study, residential HVAC equipment is defined as that used in:
single-family detached houses
single-family attached houses (e.g., townhouses)
apartment or condominium buildings with multiple dwelling units
manufactured homes, which are housing units constructed on a permanent chassis with wheels for on-road transportation to the site at which the unit will be placed
HVAC equipment discussed includes:
room air conditioners (both window units and through-the-wall air conditioners)
air source heat pumps (also known as conventional heat pumps), including split heat pumps and packaged heat pumps
geothermal heat pumps (including both ground source and water source types), which include closed loop and open loops systems
unitary air conditioners (including split, multi-split and single package units)
central heating boilers, including:
cast iron and steel types
district heating boilers, including large-scale boilers and series of large-scale central boilers that generate hot water to provide heat for an industrial complex or a densely populated urban area
warm air furnaces, also known as forced air furnaces
other HVAC equipment, including absorption chillers, dehumidifiers, humidifiers, liquid chillers, packaged terminal air conditioners, and room and zone heaters
Excluded from the scope of this study are:
portable versions of equipment such as air conditioners, heaters, dehumidifiers, and humidifiers
sanitary hot water heat pumps
heat pumps used to solely produce hot water, to heat pools, or to provide refrigeration
products associated with combined heat and power generation systems
ventilation systems, including air handlers and ductwork
fluid circulation systems, including radiators used with boilers
used and rental equipment
equipment used in vehicles
Housing units located in a structure whose primary purpose is something other than habitation, such as a small living space contained in a larger retail facility, are outside of the study’s scope.
Demand by Region
Global demand for HVAC equipment in the residential market is forecast to increase 4.0% per year to $49.3 billion in 2025. Factors contributing to sales will vary across regions:
Higher income regions, where a significant amount of equipment is currently installed, will continue to generate large shares of demand from the replacement of existing units.
Demand gains in lower income areas will typically be associated with either new construction or the addition of HVAC systems to existing buildings lacking these features.
The Asia/Pacific region will account for the largest share of demand gains through 2025, with above average growth anticipated in China, India, and other emerging markets. Ongoing urbanization will fuel growth in new construction, while rising income levels will make HVAC systems more accessible to buyers.
North America will continue to represent a large portion of demand, reflecting high penetration of both heating and cooling equipment in the US. However, market growth is expected to slow somewhat relative to the 2015-2020 period, when performance was boosted by the strength of residential construction in the US in 2020.
Both Western and Eastern Europe achieved above average demand growth between 2015 and 2020, but this trend is not expected to be repeated through 2025. Strong growth over the 2015-2020 period in both regions was mainly attributable to recovery from weak 2015 sales, and market maturity will slow the pace of gains going forward.
Demand by Product
Through 2025, global demand for HVAC equipment is projected to rise 4.0% per year to $49.3 billion. Heat pumps are expected to achieve particularly strong gains:
Sales of these products will be supported by diverse incentives and initiatives promoting heat pumps as eco-friendly and efficient comfort cooling systems.
In particular, heat pumps are gaining market share in European countries, as adoption of these products will help EU member nations to meet climate targets.
Room air conditioners are forecast to account for the largest share of growth in value terms, and these products will remain the most widely used HVAC equipment type in unit terms. Sales of room air conditioners will be bolstered by market expansion in emerging markets like India, where the low price point of these models continues to be a major advantage.
Warm air furnaces are also projected to post rapid gains through 2025. Growth for this equipment will be driven mainly by a strong outlook in the US, which accounted for 66% of global demand in 2020.
Product demand trends vary across region, with sales dependent on a region’s:
level of economic development
preference for comfort cooling
building design trends
age of building stock
Heating equipment is generally viewed as a necessity, especially in colder climates, while comfort cooling is seen as more of a luxury or convenience in many nations.
Unitary Air Conditioners
Unitary air conditioners utilize compressed refrigerant gas to cool air that is distributed throughout a building via ductwork. Unitary air conditioners are the most widely used type of central air conditioning equipment in the world. Unitary air conditioners can be segmented into two types: split unitary conditioners and packaged units.
Global demand for unitary air conditioners is projected to increase 3.1% per year to $5.9 billion in 2025:
Growth will be supported by rising residential building construction activity in the US, which accounts for nearly two-thirds of global demand.
However, sales gains will be restrained by the maturity of the US market, as there is little untapped opportunity for greater market penetration in the country.
Outside of North America, the greatest sales gains are expected in the Asia/Pacific region. This region is home to numerous emerging markets in hot weather climates, and rising building construction combined with increasingly modern design standards will allow for significant sales gains. Growth will be relatively healthy in Western Europe despite the general maturity of the region’s construction industries, with opportunities for greater market penetration as AC has been uncommon historically.
Global demand for residential HVAC equipment is forecast to increase 4.0% per year to $49.3 billion in 2025. Sales will improve relative to the 2015-2020 period as residential building construction activity rises.
Growth in Emerging Markets Incentivizing Innovation
A number of emerging markets – most notably India – hold strong growth prospects going forward, as rising standards of living will contribute to increasing penetration of HVAC equipment. In addition, many of the world’s most dynamic emerging markets are located near the equator, where rising temperatures are making cooling systems more of a necessity.
However, these nations typically have underdeveloped electrical infrastructure, and widespread use of HVAC equipment threatens to place strain on power grids. As a result, improvements in energy efficiency will represent a major advantage for gaining access to these markets. These nations also face additional challenges as they try to balance increasing industrialization with meeting climate targets, providing additional opportunities for producers who succeed in advancing climate-friendly technologies.
Air Conditioning Increasingly Penetrating Western Europe
Western Europe potentially represents a major growth market for air conditioning equipment, as the region includes many wealthy nations where this technology has historically been under-penetrated, especially in comparison to the US.
In recent years, unusually severe summer heat waves have driven spikes in sales of room air conditioners, and the threat of climate change presents the possibility that similar heat waves will be increasingly common going forward. As a result, sales are expected to remain elevated compared to historical norms, but cultural interest of air conditioning is expected to remain low in many areas. This represents both a challenge and an opportunity, as significantly stronger growth may be achievable if the industry can succeed in shifting attitudes toward residential air conditioning.
Heat Pumps Will Gain Market Share
Sales of heat pumps will increase at an above average rate, as the environmental and energy efficiency advantages of these products are allowing them to benefit from government incentive programs. Still, in many countries awareness of heat pumps remains low compared to more conventional HVAC products, and increased marketing to climate-conscious buyers could spur even faster gains.