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The “Electrify Everything” movement is full steam ahead in American homes, according to the latest data from AHRI which tracks annual shipments of furnaces, heat pumps, and water heaters. Heat pumps for space heating and electric water heaters have set new records, and gas equipment continued to decline as a percentage of new sales.
Furnaces & Heat Pumps
Heat pump sales have been on a steady climb since 2003, while gas furnaces have seen up and down market swings over the same period with no overall growth trend. Heat pump sales surpassed gas furnace sales for the first time in 2020 and notched peak sales of well over 4 million units in 2022. Heat pumps now account for 55% of heating system sales, a complete reversal from the recent past when gas furnaces dominated the market. While sales of both gas furnaces and heat pumps are down in 2023 from pandemic period highs, heat pumps are still far outselling gas furnaces today, and sales of heat pumps remain above historical averages. After a period of steady growth from 2011, gas furnace sales have now fallen from their peak in 2021 to levels that are in line with average sales over the last 20 years.
Water Heaters
2023 saw the highest sales of electric water heaters in the past 20 years (the AHRI data we have access to only goes back that far, but this is likely the highest sales total ever recorded). 4.9 million electric water heaters were shipped in the US in 2023, a record 613,000 more than the 4.29 million gas water heaters. Electric water heaters are opening up an unprecedented and potentially permanent lead over gas water heaters and now have 53.3% of market share. Furthermore, gas water heater sales were 2% below their 20-year average in 2023, while electric water heaters were 15% above average.
An important point to make about water heaters is that unlike heat pumps for space conditioning, AHRI doesn’t track sales of heat pump water heaters (HPWH). The majority of the electric water heater market is made up of electric resistance water heaters, the “toaster technology” that is much less efficient than heat pumps. For 2023 sales of heat pump water heaters, we look to ENERGY STAR, and that data won’t come out until September. HPWHs grew 26% in 2022 to close to 2% of market share.
The switch away from water heaters that burn fossil gas is welcome regardless though, because it is much easier to retrofit an electric resistance water heater with a heat pump. Gas water heaters typically don’t have a 240-volt electric line available that most HPWHs require, while electric resistance water heaters do. The Department of Energy has also proposed new standards to phase out electric resistance water heaters over 35 gallons by 2029, so nearly all electric water heating is likely to move to much more efficient heat pumps in the near future.
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2023 sales data of the two appliances that consume the most energy in the home show a clear trend towards electrification and away from fossil fuel combustion. Heat pumps for space heating and electric water heaters achieved a record percentage of new sales over gas combustion appliances. Looking forward, it is reasonable to assume that heat pump and heat pump water heater sales will continue their upward trend as incentives at the utility, state, and federal levels make heat pumps even more economically attractive to homeowners, putting gas furnaces and water heaters at a disadvantage. As the dialogue about the environmental benefits of heat pumps gets louder and more pervasive in popular media, this will also be a stimulus for increasing heat pump and heat pump water heater sales.
By Joe Wachunas and Brian Stewart: Brian Stewart and Joe Wachunas both volunteer at the nonprofit Electrify Now.
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