“At year-end, field inventories for resi were down roughly 30% year-over-year in line with our expectations,” said Goris. “And we believe that field destocking is now substantially behind us. Similarly, light commercial distributor inventories were down 25% year-over-year. For the full year, CSA commercial had another excellent year, with sales up over 25%, offset by resi down 9% and light commercial down 20%.” 

David Gitlin, chairman and CEO, said the residential downturn in the second half of 2025 was steeper than expected but followed several years of unusually strong demand that likely pulled replacement activity forward.  

“Between 2020 and 2024, our industry averaged 9.7 million units for a cumulative overage, so to speak, of about 3.5 million units,” he said. “Last year, we estimate our industry delivered about 7.5 million units, so we absorbed about 45% of that overage. We are assuming that we absorb the balance in 2026.” 

Gitlin added that Carrier has worked closely with distributors to reset inventory to more sustainable levels.  

“We went to great lengths with our channel partners to end at the field inventory levels that we had said,” he noted, adding that residential inventories are now roughly in line with 2018 levels. 

Asked about inventory levels for the remainder of the year, Gitlin said Carrier and its channel partners are aligned in their planning and are taking a cautious approach after being caught off guard by the magnitude of last year’s second-half decline. He said distributors worked closely with Carrier to reduce field inventories, leaving the channel in a more balanced position.  

“We think that we're balanced, and it will now be a function of underlying demand as we get into the season,” he said. 

Repair Vs. Replace 

Residential volumes have also been pressured by an increase in repair activity, which has diverted demand away from full system replacements. Gitlin said slower existing home sales encouraged homeowners to delay full system replacements, opting instead to “limp along with a repair” until they sell or move. The transition to new refrigerants also played a role, as contractors and distributors adjusted to new equipment, training requirements, and refrigerant availability. 

“We saw an uptick in repair last year,” Gitlin said, but emphasized that Carrier does not view the trend as structural. “A typical repair can cost $1,000 … but it only extends the unit’s life by one to three years. So in general, a consumer will be better off with a full replacement.” 

Carrier expects replacement demand to increase as the housing market recovers, legacy refrigerants such as R-410A become more expensive, and the economics start to favor system change-outs over repeated repairs. 

Despite the sharp volume decline, Carrier maintained pricing discipline, said Gitlin.  

“We announced a price increase of up to 5% or 6% effective in March, and we think we'll realize in that low-single digit range.” One reason for the price increase is the higher cost of copper, steel, and aluminum. 

Looking Ahead 

Looking ahead, Carrier expects residential conditions to remain challenging in the first half of 2026 before improving later in the year as destocking fades and replacement demand rebounds. Under that scenario, Carrier expects industry unit volumes to decline 20% to 25% year over year in the first half of 2026, then flatten in the second half. For the full year, industry volumes are expected to be down 10% to 15%, while Carrier’s residential sales are projected to decline at a high-single-digit rate. 

For 2026 overall, Carrier expects flat to low-mid single-digit organic sales growth, with reported revenue of approximately $22 billion. Strong double-digit growth in commercial HVAC and aftermarket businesses is expected to offset continued softness in residential and light commercial segments. 

“We are the best-positioned company in our industry when our short-cycle businesses [residential and light commercial] recover, which they surely will, and we are poised to see outsized gains when they in fact recover,” said Gitlin. “We enter 2026 energized and focused on outgrowing our markets, delivering best-in-class solutions for our customers, and driving productivity as we always do.”