Smart Climate Solutions and Retrofit Demand Fuel 4.8% CAGR Growth in U.S. HVAC Services Market Through 2035
The U.S. HVAC services market is entering a phase of steady and resilient growth, driven by rising replacement demand, energy efficiency regulations, and rapid adoption of smart climate technologies. Valued at USD 28.53 billion in 2025, the market is estimated to reach USD 29.91 billion by 2026 and is projected to expand further to USD 45.72 billion by 2035, growing at a CAGR of 4.8% during 2026–2035.
Market momentum is being reinforced by federal efficiency
initiatives, regulatory compliance mandates, and accelerated deployment of
connected HVAC solutions. Rising service demand across residential, commercial,
and institutional buildings in major metropolitan areas such as New York, Los
Angeles, and Chicago continues to strengthen the national market landscape.
Federal programs led by the Department of Energy and emission reduction
guidelines issued by the Environmental Protection Agency are further catalyzing
retrofit activity, system upgrades, and long-term maintenance contracts.
The industry is witnessing a structural shift toward energy-efficient
optimization, predictive maintenance, and digitally enabled service models.
Growing adoption of smart thermostats, building automation systems, and
connected diagnostics is transforming traditional service delivery while
enhancing system performance, compliance, and lifecycle cost management.
Additionally, the transition to low-global-warming-potential refrigerants under
federal climate policies is generating significant demand for certified
refrigerant management and compliance-driven servicing.
Rising replacement demand for aging HVAC systems remains a
primary growth driver, supported by incentives under the Inflation Reduction
Act and DOE-administered energy efficiency rebate programs. Increasing focus on
indoor air quality and building health standards is also boosting service
utilization, particularly across healthcare, education, and public
infrastructure facilities.
From a segmentation perspective, maintenance services
dominate the market with a 46% share, followed by installation services at 32%
and repair services at 22%. Retrofit and replacement activities account for 58%
of total revenue, highlighting the maturity of the U.S. building stock and the
growing emphasis on energy-efficient upgrades. Residential applications lead
demand, contributing 44% of market revenue, while commercial and institutional
sectors continue to generate consistent service volumes.
Regionally, the Southern United States leads with a 27%
market share, driven by high cooling demand, population growth, and residential
expansion. The Northeast follows closely, supported by aging infrastructure and
stringent energy codes, while the Midwest and Western regions benefit from
balanced heating-cooling needs and energy efficiency-focused policies.