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Shortages and Sticker Shock Stall Summer HVAC Sales
Cautious consumers, lack of R-454B, and high-priced equipment dampened demand
The HVAC industry thrives on extremes. When the mercury rises or falls, so do replacement sales. But this summer, even with plenty of heat across much of the country, residential contractors reported something unusual: they just weren’t that busy with new installs. And unfortunately, it sounds as if the slowdown could drag on through the rest of the year.
In their second quarter earnings reports, Carrier, Trane, and Lennox confirmed what contractors had already been grumbling about on social media: softening residential HVAC sales. One reason for the slowdown was the rocky transition from R-410A to the lower-GWP refrigerant R-454B. While many OEMs increased the charge in new equipment, there was (and is) still a shortage of aftermarket refrigerant cylinders. Lennox admitted in its second-quarter earnings call that dealer confidence was rattled by inconsistent supply, while Carrier and Trane pointed to bottlenecks in April and May that depressed residential volume.
During the late July earnings calls, manufacturers were insisting the worst was over -- with pre-charged units and improved cylinder availability working through the system. But the damage was done, as contractors were already seeing homeowners opt for repairs over replacements, citing both sticker shock and economic uncertainty.
Macroeconomic headwinds certainly didn’t help. Higher interest rates made financing tougher, while inflation pinched discretionary spending. Lennox executives noted that more homeowners shopped around this summer, often seeking out multiple bids and pushing for discounts.
Industry data reinforced those concerns. HARDI distributors reported a 6.8% sales gain in July, but growth was driven mostly by higher prices, not stronger demand. AHRI July shipment data told the real story, as U.S. combined shipments of central air conditioners and air-source heat pumps plunged 26.8% compared to a year ago, following a 22% drop in June.
Contractors confirmed the shift in real time on social media. Some said homeowners were more interested in short-term fixes rather than full system replacements, often asking to keep aging units limping along for another season. Others complained that while service calls were steady, few were turning into full system replacements.
Sticker shock seems to be the main problem. Between the switch to A2L refrigerants, tariffs, and repeated OEM price hikes, systems cost thousands more than just a few years ago. As one contractor put it on social media, every new quote feels higher than the last, and many homeowners are walking away or trading down to cheaper models. Or else they’re opting to repair rather than replace.
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For OEMs, that dynamic is troubling, because once homeowners choose to repair, they may push replacement off for years. For contractors, that translates into tighter margins, as repairs usually bring in less revenue than a replacement job -- and that’s only if parts can be found. I’ve heard from several contractors this summer who say they’re waiting weeks for parts, and too often, the ones that finally arrive are damaged.
Earlier this year, HVAC manufacturers predicted refrigerant supply would stabilize by year’s end and even suggested pent-up demand could roll into 2026. But by September, at a Morgan Stanley conference, OEMs warned that residential demand was weakening faster than expected. Carrier, which had projected a 20% to 25% decline in second-half residential volume, now expects North American volumes to plunge more than 40% in the third quarter alone. Trane also lowered its outlook, moving from a forecast of high single-digit declines to cautioning that Q3 sales could drop by as much as 20%.
Lennox did not issue specific guidance at the conference, but CFO Michael Quenzer pointed to multiple headwinds in the residential market that include tariffs, cooler weather in some parts of the country, R-454B shortages, lingering R-410A inventory, and weak existing home sales. All these variables hit at the same time, he said, before stressing that the long-term outlook remains intact: “We think longer term, structurally, the industry is still very disciplined in how we all go to market. We’re looking forward to getting into the next year.”
Contractors certainly agree, as their reality this year has been fewer replacements, more repairs, cautious customers, and ongoing refrigerant uncertainty. For now, they’re pinning their hopes on a cold winter -- and homeowners willing to swap short-term fixes for new HVAC systems.
