Up until recently, sales of central, ducted, air-source heat pumps were on a tear, growing from 1.6 million units in 2009 to 2.3 million units in 2014, according to the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). But, in 2015, sales of heat pumps slipped 3.6 percent from the previous year, and, as of February 2016, sales are down 11.6 percent compared to the same period last year.

Causes for this sales slump may include lower gas prices, milder weather, and higher efficiency regulations. Whether declining sales will continue this year remains to be seen, but manufacturers are hopeful sales of heat pumps will rebound at least modestly in the near future.


While it may be difficult to pin the drop in heat pump sales on any single event, a national minimum-efficiency standard that went into effect last year probably has something to do with it, said Tim Alford, product manager, Nortek Global HVAC. “The efficiency standard really complicated things, leaving us to wonder, is the drop due to mandates that require base heat pump models to perform at 14 SEER instead of 13 SEER, which therefore makes them more expensive? Is it because in the North, homeowners opted for a 13-SEER air conditioner over a 14-SEER heat pump to save money? Is it because many distributors bought ahead at the end of 2014, so our sales were inflated that year? All of these are likely scenarios, but we can’t say with certainty which one is right.”

Due to the efficiency standard, it may not be fair to compare early 2015 statistics to those from early 2016, because the early months of 2015 saw an above-average increase in shipments as manufacturers produced higher volumes of 13-SEER equipment ahead of actual demand, said Daniel Rawson, manager of strategic marketing, Goodman Mfg. Co. “We feel this is largely due to the abnormal volume increase in 2015 driven by the efficiency changes. As we get farther into 2016, this should level off,” added David Palazzolo, product manager of outdoor splits, Goodman.

John Mix, product manager of residential ducted split systems, Carrier Corp., agrees that 2015 was a unique year and that the standard’s impact on sales will be temporary. “Last year, the industry had a prebuild of 13-SEER units in the fourth quarter of 2014 in preparation for new regional standards for both air conditioners and heat pumps and this impacted annual industry numbers.”

While recent regulatory changes created an anomaly of increased sales in 2014 compared to 2015, there were other factors affecting sales, as well, said Jeff Tyminski, portfolio leader of heat pump and air-handler systems, Trane Residential. “Unseasonably wet weather across the Gulf Coast during May and June 2015 depressed this region’s activity, which has a higher than average exposure to ducted heat pumps. In addition, the Southeast region had a significant cold snap in 2014, which drove an increase in replacement activity and resulted in a difficult 2015.”

Another reason why heat pump sales are declining may be due to a growing number of areas around the country that now have access to cheap natural gas. “Low-priced natural gas erodes the economic benefit of dual-fuel applications [heat pump and furnace system combinations] and tilts the economics to favor furnace heating versus heat pump heating,” said Tyminski.


As the regulatory impact unwinds and weather patterns return to more normal conditions, sales of heat pumps should see some modest growth this year, said Tyminski. “While not expected, a significant increase in natural gas prices could cause the playing field to shift back toward heat pump systems in certain parts of the country. However, with 80 percent of the market driven by replacement equipment, broad shifts are generally muted. New construction will account for the bulk of deviations from longer term trends.”

Another trend affecting the industry is the continued growth of ductless heat pumps, which are among the fastest-growing products in the market, said Tyminski. “But, our variable-speed ducted heat pumps are also growing faster than average, probably due to the emerging technology that is helping expand the traditional geographic boundary farther north into states like Maryland and Pennsylvania.”

New technologies will definitely help drive sales of heat pumps going forward, noted Mix, as will other segments of the market, such as net-zero homes. “Inverter technology is improving the potential performance of heat pumps, in general.”

Before peak cooling season hits, it’s difficult to predict whether heat pump sales will bounce back this year, said Alford. “But it’s also important to note it’s not just heat pumps that saw a dip in 2015 — split-system shipments were flat for the year, overall, and while air conditioner shipments did grow, it was only by 1 percent, compared to 7 percent growth in both 2014 and 2013. But heat pumps are down slightly more than air conditioner sales.”

Even so, sales of Nortek’s standard-efficiency, single-stage, 14-SEER heat pumps remain solid.

“Standard-efficiency equipment is always popular because of its price point, but our 14-SEER heat pump is unique, because it uses an aluminum microchannel coil to reduce its weight and refrigerant volume,” said Alford. “On our highest-efficiency equipment, we sell more heat pumps than air conditioners, which is why we are continuing to invest in heat pump technology.”

Palazzolo anticipates heat pump sales will stabilize a bit more based on normal yearly shipments with a modest increase expected in the next few years.

“This modest growth would result from continued gradual displacement of furnaces over time in warmer climates and could also be influenced or enhanced with the implementation of local utility incentives,” he said. “However, there may be some small mix shift in Southern states from heat pumps, which have a minimum-efficiency requirement of 14 SEER to air conditioners, which continue to have a minimum-efficiency requirement of 13 SEER.”

“We expect to see continued strong sales in heat pump markets such as Texas, Tennessee, Florida, and the Carolinas,” said Rawson. “Products with inverter-driven technologies continue to grow, as well.”

Absent additional efficiency regulations and increased natural gas prices, manufacturers believe the heat pump slump will be short-lived and that weather conditions will favor higher sales this year. “We’re crossing our fingers for a hot summer,” said Alford.

Publication date: 5/23/2016

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