JPMorgan's HVAC Analyst on Unit Volumes, Pricing and the Road Ahead — The Full Breakdown

When JPMorgan's HVAC sector analyst puts out a note, the industry listens. The firm covers the major publicly traded HVAC companies — Carrier, Trane Technologies, Lennox International, Watsco, and others — and its sector analysis reaches investors, corporate strategists, and industry executives who use it to make capital allocation decisions worth hundreds of millions of dollars.

The Hardwire News has broken down JPMorgan's latest thinking on the HVAC market for 2026: what they see in unit volumes, what they expect from pricing, which segments they think hold up, and what the recovery timeline looks like. Here is the full picture.

What JPMorgan Is Saying About HVAC Unit Volumes

JPMorgan's current framing describes 2026 as a trough year for residential HVAC unit volumes. The firm's analysis suggests that the combination of elevated equipment prices, a softened housing market, and the consumer deferral dynamic — homeowners choosing repair over replacement — is suppressing replacement volumes below their long-run normalised level.

The firm's base case for residential shipments in 2026 is a modest stabilisation from the 2025 decline, rather than a meaningful rebound. This aligns with what major OEMs have communicated publicly and what distributor data has shown through early 2026.

JPMorgan's HVAC sector analysis characterises 2026 as a trough year for residential unit volumes, with stabilisation expected before a more meaningful recovery builds through 2027 as deferred replacements and normalising channel inventory support demand.

The Pricing Environment: Not Improving Yet

One of the most important signals in JPMorgan's analysis is the pricing environment. HVAC equipment prices rose sharply from 2020 to 2024, with manufacturers implementing multiple rounds of increases. The question for 2026 is whether prices hold, compress, or continue rising.

The firm's view is that price increases will moderate but not reverse in 2026. Manufacturers are unlikely to cut list prices — doing so risks signalling demand weakness and creates channel conflict with distributors holding higher-cost inventory. But the pace of price increases is expected to slow significantly compared to the aggressive annual hikes of 2022 through 2024.

Tariff-driven cost pressures, particularly on components sourced from overseas, remain a wildcard. New or expanded tariffs on imported HVAC components could push manufacturer costs higher and reignite price increase cycles, even in a market where consumer demand is price-sensitive.

Which HVAC Segments Are Holding Up

Not all segments of the HVAC market are experiencing the same dynamics. JPMorgan's analysis highlights several areas of relative strength:

• Commercial HVAC: The commercial segment, particularly data centre cooling, has been a meaningful offset to residential weakness. AI infrastructure investment has driven unprecedented demand for industrial cooling solutions, and companies with commercial HVAC exposure — including Carrier and Trane Technologies — are benefiting. Bloomberg Intelligence forecasts the six largest US hyperscalers will spend more than $593 billion in 2026, with cooling infrastructure representing a growing share of that capital expenditure.

• Service and repair: Aftermarket revenue has held up well. With consumers deferring replacement, maintenance and repair tickets are growing. Companies with strong installed base coverage and service contract programmes are outperforming on revenue stability.

• Distribution: Watsco, the largest US HVAC distributor, has demonstrated the resilience of distribution economics through the down cycle, with revenue declining less than equipment manufacturers due to the mix of parts, supplies, and service-oriented sales.

Investor Signals Worth Watching

For HVAC business owners who watch the public markets as a leading indicator of industry conditions, several signals are worth monitoring:

• Carrier Global and Trane Technologies guidance: When the major OEMs update their full-year guidance at quarterly earnings calls, their language around residential volume, pricing, and channel inventory tells the industry where conditions are heading. Positive guidance revisions typically precede improved distributor and contractor demand by one to two quarters.

• Watsco revenue and margins: Watsco's quarterly results function as a proxy for distributor-level HVAC demand across the US. Its sales per location metric and gross margin trends are among the most useful real-time indicators of where the market actually is versus what manufacturers are shipping.

• Lennox International's residential segment: Lennox provides granular segment data on residential HVAC volumes, pricing, and margin that is not available from most private industry data sources. Its quarterly disclosures are required reading for anyone trying to understand the residential market.

The Recovery Timeline

JPMorgan's base case recovery timeline points to 2027 as the year when residential HVAC volumes begin a more meaningful rebound. The key drivers behind that thesis:

First, the equipment installed during the 2015 to 2017 construction and replacement boom is now approaching the 10 to 12 year mark — the typical replacement cycle for residential HVAC equipment. This cohort of aging equipment represents a large pool of deferred replacement demand that will eventually re-enter the market regardless of consumer sentiment.

Second, if interest rates decline in 2026 and into 2027, the housing market activity that drives new installation demand should improve. HVAC contractors closely tied to new construction have been particularly affected by the housing slowdown.

Third, the A2L transition disruption that created uncertainty in 2025 should resolve into a more stable supply environment through 2026, removing a key friction point for both contractors and consumers.

Frequently Asked Questions

What is JPMorgan's view on the HVAC market in 2026?

JPMorgan characterises 2026 as a trough year for residential HVAC unit volumes, with stabilisation expected rather than a strong recovery. The firm sees pricing moderating, commercial HVAC and service segments outperforming, and a more meaningful residential recovery building through 2027.

Which HVAC companies does JPMorgan cover?

JPMorgan's HVAC coverage includes major publicly traded companies such as Carrier Global, Trane Technologies, Lennox International, Watsco, and others with significant HVAC business exposure.

When will the HVAC market recover?

Industry consensus and JPMorgan's analysis point to 2027 as the year of a more meaningful residential HVAC recovery, driven by the replacement cycle for equipment installed in 2015 to 2017, potential interest rate reductions improving housing activity, and normalising channel inventory.

Why is commercial HVAC outperforming residential in 2026?

Commercial HVAC, particularly data centre thermal management, is benefiting from massive capital investment in AI infrastructure. Hyperscalers are projected to spend more than $593 billion in 2026, with cooling systems representing a critical and growing component of that investment.