Looking at the last five years of unitary shipments, three of those years have reached record levels. (See Figure 1.) And if you go back to 1994, six of the last eight years have been record years.
The years 1994 through 1996 saw three straight record shipment levels for the industry, culminating in 5,670,665 units shipped in 1996. In 1997, shipments dropped back 6% to 5,359,858, but it was still the second-best year ever up to that time. The industry was on a roll.
In 1998, unitary shipments jumped to 6,239,978 units, a remarkable 16% increase over 1997 and a new all-time high. It was the first time that the industry ever surpassed 6 million units shipped, a significant milestone in hvac history, and it was exceeded by a wide margin.
The next year marked another record. In 1999, 6,647,071 units were shipped, a 6% increase over the previous year. December shipments were especially strong, rising 22% over December 1998.
With another record year in 2000, the industry put together another string of three record years, shipping 6,685,481 units, a 1% improvement from 1999. The 1990s had concluded with an incredible run, and the impressive numbers continued into the new decade.
In 2001 a recession hit and the economy slowed. The streak had ended. Shipments declined 6% to 6,281,443 units.
Because of the industry’s recent substantial and unusual success, getting into the mindset of expecting a record every year is not realistic, and it is not sustainable.
The 2001 “correction” due to the economic slowdown was relatively mild. The number of units shipped was still better than 1998, the first year of attaining the 6 million mark, and it was only slightly below the record levels of 1999 and 2000.
Moreover, the heat pump segment clipped along at a record pace. Air-source heat pump shipments in 2001 grew 8% to 1,442,355, eclipsing the mark set in 2000 of 1,339,435. It was, in fact, the fourth straight record-breaking year for these products.
In February, combined central air conditioner and air-source heat pump shipments were down 3% from February 2001. Year-to-date figures were down 1% from last year. Heat pump shipments for February were even, with the total to date up 4% from a year ago.
Although the overall total is slightly down so far, this year is on track for another 6 million shipments with the summer cooling season still upcoming. And with the housing market expected to continue at a strong pace (see accompanying article, “Housing Forecast: A Solid Market”), the unitary outlook should be good as well.
It was just seven years ago that the hvac industry achieved 5 million unitary shipments for the first time. Three years later it jumped to 6 million, and that appears to be the new norm. The unitary market is quite healthy by historical standards, and an improving U.S. economy can only help — along with a nice hot summer.
“All the numbers we are seeing point to a good balance of housing supply and demand in most of the country,” said David F. Seiders, chief economist for the NAHB.
Seiders remarked that with the inventory of unsold new homes on the market around 4.2 months, housing will not have to make a “payback” for over-building. “The economic and financial market environment in our forecasts should provide a solid foundation for the housing market in both 2002 and 2003,” he stated.
“While some fallback in housing starts seems inevitable in the second quarter of this year, following a huge first quarter, total starts are expected to hover around the 1.6 million annual rate over the balance of this forecast period.”
“You always need to go back to the fundamentals,” noted David Lereah, chief economist of NAR. “With the economy growing, the job market rebounding, and mortgage rates staying relatively low, we see the housing market staying healthy through 2003.”
A record 906,000 new homes and 5.3 million existing homes were sold in 2001.
— Greg Mazurkiewicz