Global Residential Furnace Maket - 2023-2030

Overview

Global Residential Furnace Market reached US$ 6.8 billion in 2022 and is expected to reach US$ 11.0 billion by 2030, growing with a CAGR of 6.2% during the forecast period 2023-2030.

The global residential furnace market is expected to witness significant growth over the upcoming years, mainly on account of new technological advances in the furnaces to improve their operational energy efficiency. Manufacturers are also increasingly integrating smart features through internet of things (IoT) to improve customer usage experience.

The growing trend of private equity investment into residential furnace manufacturers is likely to influence market growth over the long term. With private equity firms looking for safer investment options in wake of the pandemic, small and medium-sized manufacturers offer the perfect opportunity. Furthermore, an outsize investment allows these smaller players to expand their market presence.

Dynamics

Rising Rates of Home Renovations

Home improvements and renovations have witnessed an uptick over the past three years. With people spending more time at home due to the COVID-19 pandemic-induced lockdowns, home improvements become more popular as people sought to channel their energies to more creative endeavors. According to data from the Joint Center for Housing Centers of Harvard University (JCHS), consumer spending on home renovations and improvements in U.S. topped US$ 472 billion and is expected to reach US$ 485 billion in 2023.

Home renovations create opportunities for home owners to modernize their heating systems by installing new residential furnaces. In fact, given the volatility in global housing market and decline in new home sales in some developed markets, the majority of new residential furnace sales are occuring in home renovations. Rising rates of home renovations, especially in developed markets, where the average house age is more than 10 years, will be a key factor in driving market growth over the forecast period.

Increasing Development of Mixed-Use Residential Zones

Chronic housing shortages has become a major feature of the developed world. Housing growth over the previous two decades has been highly anaemic and coupled with other factors, such as rising immigration rates and fast-paced growth in house prices, has snowballed the issue into a major political controversy.

Therefore, in order to alleviate housing shortage and to ensure affordable housing for the public, many countries are embarking on the development of high-density mixed-use residential zones. The zones encapsulate new apartments with commercial and retail spaces, thus providing an enticing prospect to first-time home buyers.

The rising construction of high-density mixed-use residential zones within the city are expected to generate significant demand for centralized heating from residential furnaces. As this type of housing development becomes evermore popular, it will concurrently raise the demand for residential furnaces over the forecast period.

New Government Energy Efficiency Regulations

Governments are unveiling new efficiency regulations for energy-intensive appliances in a bid to increase sustainability. For example, U.S. government has introduced a mandatory 95% annual fuel utilization efficiency (AFUE) standard on all new gas-powered residential furnaces sold from 2028. Furthermore, the European Union has also adopted energy efficiency rules for solid fuel heaters, which are likely to go into effect over the next few years.

The introduction of new energy efficiency rules will lead to an upward trend in residential furnace prices as manufacturers will pass on the increased costs of new efficient systems onto the consumers. With post-pandemic supply chain disruptions having already caused a significant price hike, new government efficiency standards are likely to have a detrimental effect on the sales of new residential furnaces over the medium term.

Segment Analysis

The global residential furnace market is segmented based on type, heat source, design and region.

Economical Costs Makes Gas-Powered Residential Furnace Ideal for Most Consumers

Residential furnaces utilizing gas as a heat source are most popular among consumers. Ease of installation, usage, high heating efficiency and the ability to ensure heating in the coldest temperatures are some of the key factors driving its popularity. Furthermore, gas-powered residential furnaces have some of the longest operational lifespans, nearly 15 to 20 years.

However, gas-powered residential furnaces require a municipal piped gas supply to function effectively. Still, given the operational inefficiences of electric, oil and coal as heating sources, gas-powered residential furnaces are more in demand among consumers and are likely to remain so without major design and operational improvements in other types of residential heaters.

Geographical Penetration

Consumers in North America Grapple With Increasing Prices

North America is expected to have the highest market growth during the forecast period. North America is a high per capita income region and is the primary source of demand for the global residential furnace industry. U.S. and Canada are the two countries within the region, which essentially generate all the demand for residential furnaces.

The North American market was highly fragmented, with a multitude of small, medium and large residential furnace manufacturers. However, over the last decade, the regional industry has undergone major consolidation, with multinational HVAC conglomerates such as Carrier and Johnson Control acquiring a host of smaller players. The consolidation has left consumers with reduced choices and has led to an increase in overall prices.

New energy efficiency requirements are likely to further increase the price burden on consumers. For instance, after U.S. Department of Energy (DoE) unveiled new energy efficiency regulations for residential furnaces in 2023, to be implemented five years later, manufacturers are likely to further raise prices to account for fitting of new technologies.

COVID-19 Impact Analysis

The onslaught of the COVID-19 pandemic created a slew of challenges for the global residential furnace market. The pandemic led to the disruption of global supply chains, thereby affecting the production, distribution and marketing of residential furnaces. Many manufacturers faced challenges in sourcing specialized components, as well as delays in transportation and logistics.

Residential furnace manufacturers adapted to the change in global market conditions by modifying residential furnaces with high-performance, antiviral air purification systems. However, it led to a steep price hike, leaving it unaffordable for a vast majority of consumers. Many consumers in developed regions put off purchasing new residential furnaces in wake of difficult economic conditions brought on by the pandemic.

Residential furnace manufacturers were buoyed by the K-shaped recovery in many developed markets in the post pandemic period. However, the effects of the pandemic are likely to linger on the industry over the short and medium term.

Russia-Ukraine War Impact Analysis

The ongoing war between Ukraine and Russia will continue to influence the demand dynamics of the global residential furnace market over the medium term. Stringent economic sanctions imposed on Russia due for the war have caused western residential furnace brands to exit the Russian market. The gap in the Russian market has been filled by lower quality Chinese imports. Western residential furnace brands are available at higher than market prices through parallel imports in the local grey market.

The sanctions on Russia have led to high energy costs for nations of the European Union (EU). High energy prices have led to consumers to cutback on heating expenses, thus curtailing the sales of residential furnaces in various European market over the short and medium term. The prolongation of the war could led to a permanent increase in European energy prices, thus affecting residential furance sales over the long term.

By Type

• Single Stage Furnace
• Two Stage Furnace
• Modulating Furnace

By Heat Source

• Gas
• Electric
• Oil
• Wood
• Hybrid

By Design

• Natural Draft
• Forced Draft
• Condensing

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • Germany
  • UK
  • France
  • Italy
  • Spain
  • Rest of Europe
• South America
  • Brazil
  • Argentina
  • Rest of South America
• Asia-Pacific
  • China
  • India
  • Japan
  • Australia
  • Rest of Asia-Pacific
• Middle East and Africa

Key Developments

• In October 2023, U.S. government issued new federal regulations requiring new gas-powered residential furnaces to maintain a 95% annual fuel utilization efficiency (AFUE), beginning from 2028.
• In September 2023, Johnson Controls launched the new air365 Hybrid dual fuel system that combines heat pump with furnace to provide economical residential heating and cooling.
• In September, 2023, Syntag Capital, a private equity firm, announced plan to buy the European HVAC operations of Lennox International Inc.

Competitive Landscape

The major global players in the market include: Lennox International Inc., Carrier Corporation, Johnson Controls, Rheem Manufacturing Company, Daikin Industries Ltd., Fujitsu General, Alpine Home Air Products, Goodman, Trane and Boyertown Furnace.

Why Purchase the Report?

• To visualize the global residential furnace market segmentation based on type, heat source, design and region, as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of residential furnace market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as excel consisting of key products of all the major players.

The global residential furnace market report would provide approximately 61 tables, 59 figures and 192 Pages.

Target Audience 2023

• Furnace Manufacturers
• Manufacturers/ Buyers
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies