For the fourth consecutive year, air-source heat pumps outsold gas furnaces in the United States. But 2025 added a second headline that is even more significant: heat pumps started outselling air conditioners too. The electrification of residential HVAC is no longer a forecast, a policy aspiration, or a talking point. It is a documented market reality.
The implications reach every corner of the HVAC industry — from the manufacturers deciding where to direct capital investment, to the distributors managing inventory, to the contractors deciding which certifications to prioritise, to the homeowners trying to understand what equipment they should be buying. Here is the full picture.
The Shipment Numbers in Full
According to data from the Air-Conditioning, Heating, and Refrigeration Institute, air-source heat pump shipments in the US outpaced gas furnace shipments for the fourth year in a row in 2025. The margin continues to widen. But the figure that grabbed industry attention was the head-to-head comparison with central air conditioners — a category that heat pumps have historically trailed significantly.
In 2025, air-source heat pump unit shipments surpassed central air conditioner shipments on a monthly basis for the first time. This is not simply a regulatory story — though efficiency mandates and rebate programmes have played a role. It reflects genuine consumer demand for equipment that handles both heating and cooling in a single, increasingly cost-competitive system.
Air-source heat pumps outsold gas furnaces for the fourth consecutive year in 2025, and began outselling central air conditioners — a milestone that marks a structural shift in US residential HVAC equipment demand, according to AHRI shipment data.
Four Years of Heat Pump Dominance Over Gas Furnaces
The trend of heat pumps outselling gas furnaces began in 2022, driven by a combination of factors that have only intensified since. Federal and state incentives under the Inflation Reduction Act made heat pumps significantly more affordable for consumers. Gas prices spiked and then remained elevated in many markets. Efficiency standards tightened. And the range of cold-climate heat pump options expanded dramatically, removing the longstanding objection that heat pumps do not work in northern climates.
Four years of consecutive data is not an anomaly. It is a trend line. And trend lines in HVAC equipment markets, where installation infrastructure, technician training, and distribution networks all follow equipment demand, take years to reverse once established.
The practical implication: distributors and contractors who have structured their businesses primarily around gas furnace installation and service are now operating against the direction of market flow. That does not mean gas furnaces disappear tomorrow — the installed base of hundreds of millions of gas systems across North America will require service for decades. But new installation work is tilting decisively electric.
Why Air Conditioners Are Now Losing Ground
The more surprising data point is heat pumps beginning to outsell air conditioners. Understanding why requires understanding what a heat pump actually is in the modern market.
A modern heat pump is an air conditioner that also heats. In mild and moderate climates — which describes the majority of the US population-weighted geography — a heat pump replaces both the air conditioner and the gas furnace or electric resistance heating system in a single unit. When a homeowner in Virginia or Georgia or Texas replaces their ageing air conditioner, they are increasingly choosing a heat pump rather than a like-for-like AC replacement, because the incremental cost is declining and the dual-function benefit is clear.
Add to that the 25C federal tax credit offering up to $2,000 for qualifying heat pump installations — versus $600 for qualifying central air conditioners — and the financial incentive to choose a heat pump over an air conditioner is significant and easily communicated.
What This Means for Distributors and Contractors
For distributors, the shift requires inventory rebalancing. Carrying the right heat pump SKUs — particularly cold-climate units, ducted and ductless configurations, and A2L-compliant models — is now a baseline expectation rather than a specialty offering.
For contractors, the shift has three immediate implications:
• Training: Heat pump installation and service requires different knowledge than gas furnace work. Contractors who have not invested in heat pump training are increasingly leaving money on the table — and in some markets, losing bids because they cannot confidently spec or install the equipment customers want.
• Sales conversation: The default replacement recommendation is shifting. A contractor who automatically quotes a like-for-like air conditioner replacement without presenting the heat pump option is not giving the customer complete information — and may be losing the job to a competitor who does.
• Service revenue: Heat pumps require different maintenance procedures than gas-only systems. Building heat pump service agreements into your maintenance offering is a near-term revenue opportunity that requires minimal additional investment.
The Regulatory Backdrop
The heat pump market shift is not happening in isolation from policy. The Inflation Reduction Act's 25C tax credit and 25D credit for geothermal heat pumps have directly subsidised consumer adoption. Several states have layered additional rebates on top of federal credits, in some cases making heat pump installations effectively cost-neutral compared to gas furnace replacements when factoring in lifetime energy costs.
Federal courts upholding gas appliance bans in Maryland and Washington D.C. in March 2026 further signal the direction of regulatory travel. The equipment market is moving in the same direction as the regulatory environment — which means the shift from gas to electric is likely to accelerate rather than reverse.
Frequently Asked Questions
Do heat pumps outsell air conditioners in 2026?
Yes. Air-source heat pump shipments began outselling central air conditioners in 2025, according to AHRI data — a milestone that reflects both consumer preference shifts and the impact of federal tax credits that favour heat pump installations over standard AC replacements.
Why are heat pumps outselling gas furnaces?
Heat pumps have outsold gas furnaces in the US for four consecutive years, driven by federal and state incentives, improving cold-climate performance, rising gas prices, and tightening efficiency standards that make heat pumps increasingly cost-competitive with gas heating systems.
What does the heat pump market shift mean for HVAC contractors?
Contractors need to invest in heat pump training, update their sales conversations to present heat pump options proactively, adjust inventory and quoting templates, and build heat pump maintenance into their service agreement offerings.
How much is the federal tax credit for heat pump installation?
The 25C federal tax credit covers 30% of the cost of a qualifying heat pump installation, up to $2,000 per year. This compares to a maximum of $600 for qualifying central air conditioner installations under the same programme.
Will gas furnaces be phased out?
Gas furnaces will not disappear quickly — the installed base of hundreds of millions of gas heating systems across North America will require service for decades. However, new gas furnace installations are declining as a share of the market, and this trend is expected to continue.
