Feb. 10, 2014: Growth Predicted for US HVAC Industry
Significant Growth Forecast for 2014
NEW YORK — The HVAC industry is heavily influenced by activity in the construction market, with the majority of income generated from HVAC installations in new residential and nonresidential structures Maintaining and repairing existing equipment also accounts for a significant share of revenue, lending stability to the industry during the volatile new construction markets of recent years, notes a new report from IBISWorld. Thus, despite the economic downturn, industry revenue from 2009 to 2014 increased at an annualized rate of 2.4 percent.
The collapse of the housing market and subsequent economic recession caused new construction activity to decrease dramatically. Between 2009 and mid-2011, demand for new housing was hampered by an oversupply of existing homes and declining property values. Nonresidential building construction activity also declined, as the recession caused a contraction in the business sector. As unemployment rose and businesses reduced operations, more vacancies in commercial buildings appeared and demand for new nonresidential structures weakened. Consequently, these factors hurt demand for HVAC installations across the construction markets.
The HVAC industry has a low level of concentration, as no industry firm accounts for more than a small percentage of total industry revenue. After two years of declining revenue from 2009 to 2010, the industry rebounded in 2011 and recorded growth in 2013. Positive signs in the housing market indicate the construction sector’s burgeoning return to strength. As more homes and commercial structures are built, and require HVAC system installations in turn, demand for industry installers and technicians will increase strongly. Furthermore, national standards for energy efficiency and a growing trend toward lowering household and business energy use, is projected to encourage home and building owners to upgrade to more efficient systems. With these positive developments, industry revenue is forecast to rise over the next five years, with significant growth in 2014.
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Publication date: 2/10/2014