Equipment prices, borrowing costs, weak housing activity and expired federal incentives are converging to pressure residential HVAC replacement demand.
-- Randazzo, an HVAC company located in Michigan, has unveiled a report that showcases the current state of affairs in the HVAC replacement market for customers in the Midwest. A combination of rising HVAC equipment costs, expensive consumer credit, weak housing activity and the expiration of federal energy-efficiency incentives is creating an increasingly difficult residential replacement market across the Midwest.
Through May 2026, U.S. shipments of gas furnaces were 10.5% below the same period in 2025, according to the Air-Conditioning, Heating, and Refrigeration Institute. Central air-conditioner shipments were down 3.4% year to date.
The slowdown is also visible at the manufacturer level. Lennox reported a 7% year-over-year decline in residential Home Comfort Solutions revenue during the second quarter, driven primarily by a 12% decline in unit volume. Residential unit volume had fallen 21% in the first quarter.
Lennox executives cited affordability, elevated interest rates, inflation, low consumer confidence and weak residential construction while also describing a shift toward consumers repairing existing HVAC systems instead of replacing them.
Those pressures are particularly relevant in the Midwest, where consumer prices increased 3.8% year over year in June. Energy prices rose 16.0%, gasoline increased 26.6%, and electricity climbed 7.7%, according to the Bureau of Labor Statistics.
Replacement costs are also still increasing. The BLS Producer Price Index for air-conditioning, refrigeration and forced-air heating equipment manufacturing was approximately 2.9% higher in June 2026 than a year earlier.
Housing provides little relief. The average 30-year fixed mortgage stood at 6.69% on Aug. 6, while U.S. building permits were down 2.3% year over year in June.
The expiration of federal Energy Efficient Home Improvement Credits adds another challenge. Qualifying heat pumps had previously been eligible for credits of up to $2,000, but qualifying improvements had to be placed in service by Dec. 31, 2025.
Interested parties are encouraged to visit Randazzo’s website to view more details on the expected HVAC market changes.
About Randazzo
Randazzo Heating, Cooling, and Electrical is a Michigan-based company that’s served residents since 1988. The business is built upon giving customers the best heating and cooling solutions available, focusing on providing the highest level of service. The team is capable of HVAC installation, repair, and maintenance - as well as offering services related to electrical and plumbing concerns.
Contact Info:
Name: John Rizzo
Email: Send Email
Organization: Randazzo
Address: 51327 Quadrate Dr, Macomb, MI 48042
Phone: (586) 209-4268
Website: https://callrandazzo.com/
Release ID: 89206036
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