Manufacturers Brace for a Slow Start — but See HVACR Growth Ahead in 2026

Overall Market Forecast  

While it’s near impossible to exactly predict just what the 2026 market has in store for HVACR, most sources are projecting at least some level of growth.   

“Based on current demands, regulatory drivers, and the ongoing shift toward electrification and higher-efficiency technologies, Rheem North America expects the HVAC industry to see modest growth in the low single digits in 2026,” said Kevin Ruppelt, senior vice president and general manager, U.S. Air, Rheem North America.  

Most of the uncertainty is geared towards the residential market, and many 2026 indications project this sector will see a decline — but not for the entire year.  

“Based on recent forecasts, our own internal analysis, as well as industry expectations from other experts … we believe the residential market will likely be down in the first half of 2026, recovering in the second half, and finishing up in the low, single-digit range,” said David Budzinski, deputy CEO global, president Americas, Bosch Home Comfort.   

Trane Technologies is projecting similarly.   

“The past year brought industry challenges, including the transition to 454B refrigerant and dynamic market conditions that resulted in softer-than-expected residential markets,” said Jeff Tyminski, vice president of product management, residential HVAC, Trane Technologies. “While a slower start to 2026 is anticipated within residential, momentum is expected to build as consumer demand recovers.”  

Looking at the commercial HVACR market, projections are a bit more positive.   

“There are indications the commercial market is poised for a rebound, based on what we’re seeing in our company-owned distribution network,” Budzinski said. “We’re currently projecting market stabilization by the second quarter of 2026 and mid-single-digit growth for the year.”  

Long-term, even with ever-changing economic conditions, the HVACR industry is poised to experience levels of promising growth, the same way it has over the last several decades.   

“Despite ongoing economic uncertainty and cost pressures, interest in heat pumps, connected solutions, and A2L-compliant equipment remains strong,” said Ruppelt. “Updated standards and policy changes continue to encourage both homeowners and building owners to consider upgrades sooner rather than later, supporting steady demand.”  

Economic Conditions Shaping Product Demand  

Ruppelt said that tariffs and overall economic conditions have increased the cost of raw materials.  

“Distributors have destocked, causing demand to decline in 2025 — mirroring a trend across the industry,” Ruppelt said. That being said, contractors and consumers are staying focused on improving efficiency, managing operating costs, and adapting to A2L-related regulatory shifts.  

Rheem expects these dynamics to continue into 2026. As a result, the manufacturer is focusing on operational efficiency and close coordination with its suppliers and partners.  

Bosch is on the same wavelength.   

“As an OEM, we have been tackling the continual changes and industry uncertainty around tariffs through knowledge sharing to ensure channel partners are up-to-date on the latest changes,” said Budzinski. “We will continue to absorb as much as we can to support and protect our customers into 2026.”  

Additionally, like Rheem, Bosch is seeing high levels of channel destocking and weaker sell-through, which contributes to low growth.    

Ruppelt said demand on the commercial side is continually driven by building requirements and thus, having to upgrade older systems. On the residential side, interest in heat pumps and higher efficiency equipment that lowers utility bills is driving demand.   

“Additionally, integrated smart connected HVAC solutions are also seeing steady growth as homeowners prioritize convenience, control, and long-term savings,” Ruppelt said.   

When it comes to the economy, Budzinski said persistently high mortgage rates are impacting existing home sales, which in turn affects the replacement market. While low levels of new construction are affecting new system installation rates.  

“Another trend impacting sales is that homeowners are frequently opting to repair rather than replace a unit,” Budzinski said. “However, this will create pent-up demand and eventually turn into replacements at some future date.”  

Impacting Regulatory Changes   

Regulatory shifts such as the A2L transition and the rollback of government incentives and programs will still plague HVACR in 2026 — and continue to alter manufacturers’ product strategies and timelines.   

The shifts impacting Rheem’s product strategy going into 2026 start with the continued A2L transition, which is impacting equipment engineering and contractor training. It also changes certification requirements and the tools needed for proper installation and service.   

The same goes for Bosch.   

“In 2026, we also expect to see greater stabilization around A2L refrigerants,” Budzinski said. “In the last quarter of 2024, there was a significant last-time buy of legacy refrigerant product. High distributor stock of legacy product paired with lower sell-through has resulted in weaker shipments from OEMs in 2025.”  

Additionally, the EPA’s proposal to sunset ENERGY STAR for residential gas furnaces and central air conditioners (CAC) still looms — representing a potential major shift in third-party certification standards — though no final decision has been made.  

“Industry-wide, this will influence how high-efficiency products are positioned, labeled, marketed, and communicated to consumers. … Rheem North America continues to monitor evolving building performance standards, decarbonization policies, and regional efficiency requirements, which all impact product strategy and timelines,” Ruppelt said.   

Another factor is the rollback of government incentives encouraging heat pump adoption and electrification.   

“As these incentives have disappeared, it’s weakened the payback period of heat pumps, slowing heat pump mix shift,” Budzinski said. “That said, there’s still momentum towards electrification on the commercial side, driving more reliance on heat pumps that will continue in 2026. As an OEM, it’s a great time to be in the marketplace to help it transition to electrification and work toward the sustainability of our planet.”  

Additionally, private-equity growth in HVACR contractor and distribution segments has altered the supply chain.   

“While it has concentrated power, it’s also helped equalize or improve the performance of the different players as they’ve adopted best practices to improve the service that they provide to their customers,” Budzinski said. “It’s a good change, and it does not reduce competitiveness in the market.”  

Biggest Concerns Entering 2026  

The biggest concern heading into 2026 is really the unknown — especially when it comes to the residential market.   

“We’re monitoring and measuring it very closely,” Budzinski said. “Even though the market is down now, we fully expect to deliver year-over-year growth.”  

That uncertainty is tangible even outside of the residential market.  

“[Our] biggest concern entering 2026 is the rapid pace of regulatory changes, tariff policies, and technological change to ensure our contractor and distributor partners can adapt quickly,” Ruppelt said. “The A2L transition, evolving efficiency requirements, and shifting electrification policies all require new training, consistent installation practices, supply chain planning, and customer communication.”  

Not to mention the labor shortage that is exacerbated by an aging workforce.   

“Ensuring technicians are equipped to install, maintain, and diagnose increasingly advanced systems is critical,” Ruppelt said. “Supporting contractor education and upskilling remains a top priority as we enter 2026.”  

Even with all of these potential roadblocks, manufacturers continue to build momentum.   

Bosch is launching a number of products in 2026 while making investments in its distribution channels.   

“For distribution that’s heavily focused on replacement, we’re making changes to ensure that we have the right product at the right place when it’s needed, and for commercial buildings, we’re ensuring that we have the right features to satisfy the demands of those specific needs,” Budzinski said. “We’re also training our sales channels to maximize their efficiency in serving customer needs.”  

All in all, a projected “down” market isn’t slowing manufacturers down or stopping the positive outlook for HVACR.   

“We fully believe that we are positioned to see positive growth for our company and the industry overall in 2026,” Budzinski said. “And with the recent acquisition of the YORK and Hitachi residential and light commercial HVAC business, we see even greater opportunity ahead, strengthening our offering across key segments and expanding the value we can deliver to customers.”  

So, even amid any concerns, manufacturers’ strategic direction for 2026 is clear.  

“Going into 2026, our focus remains on providing innovative technologies and sustainable solutions that deliver comfort for homeowners, while providing our dealers an exceptional experience and advanced digital tools,” said Tyminski.