Residential and commercial boilers in USA: latest trends and prospects May 2021

Looking back at the US market of residential and commercial boilers in 2020 we can see how hard it was hit by the pandemic. Overall, in the US the heating industry, including furnaces, boilers, and heat pumps, is worth – in terms of products sold – 3.2 billion USD and fell considerably in 2020.

In common with other countries, we have seen lockdowns, their impact on construction, redundancies, which in turn diminished consumer purchasing power. We have seen heating manufacturers trying to conserve cash, wholesalers reducing their inventories, contractors staying away from work, and supply chains interrupted. We have seen costs for components, transport and labour going up, but very moderate price increase in boilers. People spending more time at home was a driver for replacement, sometimes aided by support mechanisms like the Covid Relief Plan, although it is hard to say how much would be invested into old and worn-out heating equipment.

US heating market recovery

The US heating market recovery will depend on the country’s ability to control COVID. We recognise that a strong and sustainable economic recovery is strongly correlated to a strong and sustainable health recovery – in other words, a lot to do with fast and effective vaccine deployment.

The US is accomplishing this well at the time of writing, but in five states (Arizona, California, Colorado, New Mexico and Oregon) many businesses were open even while restrictions on social distancing are ramped up. Increased vaccinations, stable household finances and relaxation of social distancing measures are leading to better productivity, but on the other hand, there is growing unemployment and although savings are generally up, this is a skewed picture as it reflects the top income earners. Risks to the expected rates of recovery include new variants of the virus, the logistical distribution of vaccines and people’s (potentially unsafe) behaviour, which may lead to further lockdowns.

US boiler market

The US boiler market is very different to China (a very volatile, policy driven market) and Europe (where severe recessions after strict lockdowns are addressed by government spending alongside EU recovery funds). It is a quite stable, steady, unspectacular market, with most growth in the combi, wall-hung boilers segment and the emphasis on competitive pricing.

With furnaces dominating (about eight furnaces are sold for each boiler sold), the hydronic heating market is replacement-based, and floor standing are still a valid, like-for-like replacement option.

With the US elections now out of the way there is a lot of discussion on the “Green New Deal”, signifying good intentions from the new administration. Meanwhile there are some quite radical state policies coming from California on the electrification of heating and we see big manufacturers scrambling to see exactly how this will affect them. 

From the traditional boilers’ manufacturers point of view their greatest concern is the development of heat pumps and whether it will come to resemble the solid growth we see in Europe. Currently, their cost is higher, they require more skill and knowledge to install, and they need to operate in a harsh climate (hydronic heating is mostly concentrated in the North East where average winter temperatures are low for air-to-water heat pumps). The drivers would be better energy efficiency, growing demand for all-electric homes and the ability to cool as well as heat.

It is thought that the residential sales of boilers will not be returning to 2019 levels before 2022. In comparison to residential, the commercial boiler market was worse affected, and the bounce back is slower with sales back to 2019 levels in 2023.

Energy efficient heating technologies

However, COVID has accelerated the drive for the future of commercial buildings, in terms of the future use of office buildings, for example. And, from a heating point of view it can be seen as an extra driver for retrofit opportunities with energy efficient technologies where return on investment can justify this. Environmental awareness will be another driving force (see San Francisco moratorium is banning gas boilers or anything gas for commercial buildings for new builds). But the greatest concern, from the end-user point of view, is not their emissions but a reduction in energy costs and more comfort, which points to their faster adoption by the commercial sector.

Demand for Energy will keep increasing, as we saw with the blackouts in Texas in February. But electricity prices fell in 2020 and are likely to stay low up to 2022 – and among the lowest globally.

And so, while building regulations are helpful in pushing certain technologies, and subsidies and rebates may be here one day and gone tomorrow, ultimately market forces are most likely to promote greener heating including heat pumps. Covid is only one of the challenges that the US heating industry is facing, alongside the climate crisis and targets, urbanisation, adoption of greener gas solutions, increasing demand for electricity and integration of heating solutions to name a few, which create challenges and opportunities and will certainly make the landscape quite different by 2030

For further information about the US boiler market, please contact us BSRIA Worldwide Market Intelligence team: 

European sales enquiries: BSRIA UK: ¦ +44 (0) 1344 465 540

America sales enquiries: BSRIA USA: ¦ +1 312 753 6803

China sales enquiries: BSRIA China: ¦ +86 10 6465 7707