HVAC Distributor Sales Jump 6.7%. Is the Market Finally Recovering?

HVAC distributor sales posted their strongest monthly gain of 2026 in July, adding another sign that the residential market may finally be stabilizing after more than two years of weak demand.

Sales at HARDI member distributors increased 6.7% year over year in July, according to the association’s latest TRENDS report. That was the best monthly gain of the year when comparing months with the same number of billing days.

Annual sales growth for the 12 months through July also improved to 2.7%, up from 2.3% through June.

On the surface, the numbers look encouraging.

But HARDI is not ready to call it a recovery yet.

Weather Did Some of the Heavy Lifting

The biggest caveat in the July numbers is heat.

HARDI Senior Market Analyst Brian Loftus said the regions with the strongest sales growth were also the regions that experienced the largest increases in cooling degree days. Regions with weaker weather saw correspondingly weaker sales.

In other words, hotter weather drove more emergency replacements and service demand.

That makes it difficult to separate improving underlying demand from a strong cooling season.

Still, July's 6.7% gain looks better than June's headline growth.

Distributor sales increased 6% in June, but HARDI estimated growth would have been closer to 1.2% after adjusting for the extra billing day compared with June 2025.

July did not have that distortion.

Another Sign the Market May Be Turning

The distributor numbers also line up with improving equipment shipment data.

U.S. manufacturers shipped just over 1.02 million central air conditioners and air-source heat pumps in June, up 21.7% from the same month last year.

Central air-conditioner shipments increased 26.8%, while heat-pump shipments increased 15.1%. Second-quarter combined shipments were up 11.3% year over year.

Taken together, the numbers suggest more equipment is moving through the HVAC channel than it was at the beginning of the year.

That matters after a prolonged correction in residential HVAC.

For much of the past two years, contractors and distributors have been dealing with slower replacement demand, higher equipment prices, elevated interest rates, soft housing activity and excess inventory left over from the post-pandemic boom.

The question now is whether July represents the beginning of a sustained recovery or simply a good summer month.

Contractors Are Still Paying Their Bills

One other data point is worth watching.

HARDI's Days Sales Outstanding, which measures how quickly distributor customers pay their bills, remained below 37 days in July and was roughly unchanged from July 2025.

That is important because sales weakness accompanied by worsening payment times would suggest contractors were under increasing financial stress.

So far, that does not appear to be happening.

HARDI noted that end-market demand has been subdued for more than two years, but stable DSO suggests conditions are not deteriorating further.

The Bigger Problem Hasn't Gone Away

The macro environment remains difficult.

Existing-home sales remain weak, residential construction is uneven, inflation remains stubborn, and elevated mortgage rates continue to put pressure on housing activity and consumer spending.

HARDI has repeatedly pointed to lower inflation and lower interest rates as important ingredients for a stronger HVAC recovery.

That is why one strong month should not be mistaken for a return to the HVAC boom years.

But the direction of travel is becoming harder to ignore.

Manufacturer shipments improved sharply in June.

Distributor sales followed with their strongest comparable gain of the year in July.

And contractor payment behavior remains stable.

What It Means for Contractors

For HVAC contractors, the latest data is encouraging but not yet a reason to dramatically change plans.

The market appears to be improving, but much of the growth is still dependent on replacement demand and weather rather than a broad rebound in housing or consumer confidence.

For distributors and manufacturers, however, the combination of stronger shipments and stronger sell-through is particularly important.

After spending much of 2025 and early 2026 working through inventory and adjusting to weaker demand, the channel appears to be moving more equipment again.

The HVAC slowdown may not be over.

But for the second month in a row, the data is pointing in the right direction.