U.S. Heat Pump Sales Hit Record Highs Even After Tax Credit Expiry
Heat pump sales in the U.S. continue to grow despite the expiration of tax credits. By Q1 2026, they surpassed gas furnaces by 32%, doubling sales over the past 15 years. Rising energy awareness and the Inflation Reduction Act's lingering impact fuel the trend.
Heat pump sales in the United States have shown no signs of slowing even after the expiration of tax incentives. Despite the end of federal tax credits (up to $2,000) in late 2025, heat pump shipments in Q1 2026 exceeded those of natural gas furnaces by 32%, marking a doubling of sales over the past 15 years. According to Lucas Davis, an energy economist at the University of California, Berkeley, heat pump shipments have exhibited a steady upward trend, unaffected by seasonal fluctuations.
Data from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI), which covers approximately 90% of the market, reveals that heat pump shipments remained stable from December 2025 to January 2026 before gradually increasing. This rise from winter to spring aligns with traditional seasonal trends but contrasts sharply with the sharp decline in electric vehicle (EV) sales following the expiration of similar tax credits.
Tax credits for EVs, which offered up to $7,500, expired at the end of September 2025. While this led to a surge in sales just before the deadline, a subsequent drop was evident, with the market now returning to normalcy. In contrast, despite the expiration of similar consumer tax benefits under the Inflation Reduction Act (IRA) at the end of 2025, heat pump sales have actually increased.
Technical Advantages of Heat Pumps
Heat pumps are devices powered by electricity, designed to transfer heat by circulating, compressing, and expanding refrigerants. During heating, they extract heat from outdoor air or the ground, and during cooling, they reverse the cycle to expel indoor heat outside. This operating principle enables them to move 3 to 5 units of heat for every unit of electricity consumed, achieving efficiency far superior to gas furnaces or electric resistance heating systems.
Operating costs depend on regional electricity prices and climate conditions, but heat pumps are generally cheaper to run than gas or oil furnaces. Since they do not involve combustion processes, they are considered a strong option for reducing a building’s carbon dioxide emissions. The U.S. Department of Energy estimates that properly installed heat pumps can reduce heating-related energy consumption by up to 50%.
Factors Behind Continued Sales Growth
According to reporting by Casey Crownhart of MIT Technology Review AI, several factors contribute to the sustained growth in heat pump sales after the expiration of tax credits.
Firstly, during the period when tax credits were available from 2023 to 2025, consumer awareness and understanding of heat pumps significantly increased, as did familiarity among installation contractors. This knowledge and trust have continued to support sales even after the tax credits ended.
Secondly, rising natural gas prices between 2025 and 2026, coupled with relatively stable electricity rates, have strengthened the economic appeal of heat pumps. Crownhart notes that while the upfront installation costs of heat pumps are higher than those of gas furnaces, their lower long-term operating costs are a significant draw for consumers.
Thirdly, state-level subsidies and rebate programs offered by power companies have helped fill the gap left by the expiration of federal tax credits. States like California, New York, and Massachusetts have maintained their own heat pump support programs, bolstering sales.
Finally, growing awareness of climate change and increasingly stringent regulations to decarbonize buildings have expanded demand. Some cities and states have introduced bans or restrictions on fossil fuel heating in new constructions, further driving the shift toward heat pumps.
Challenges and Market Outlook
For heat pumps to achieve broader adoption, two major technical challenges remain: high installation costs and reduced efficiency in cold climates. During harsh winters in regions like the Midwest and Northeast, the efficiency of heat pumps decreases as outdoor temperatures drop, often necessitating supplemental heating. Manufacturers are working on developing models specifically designed for low-temperature conditions, and performance improvements are underway.
The shortage of skilled installers also poses a growth constraint. Heat pump installation requires specialized knowledge and certification in handling refrigerants, making the demand for trained professionals higher compared to gas furnace installations. Industry organizations are expanding training programs to address this shortage, but demand growth is outpacing supply.
In the medium term, federal energy policies may significantly influence the heat pump market. While the current Trump administration has scaled back consumer benefits under the IRA, sales data indicate that demand for heat pumps remains robust, even without policy incentives.
Editorial Opinion
The latest data showing continued growth in heat pump sales despite the expiration of federal tax credits underscores the importance of “momentum” in the energy transition. Once consumers experience the benefits of a technology and installation ecosystems are well-established, markets can grow autonomously, even in the absence of subsidies. This trend offers valuable lessons for other clean energy technologies.
The fact that heat pump sales surpassed gas furnaces by 32% in Q1 2026 highlights that these devices are not merely reliant on subsidies. From a long-term perspective, building electrification is expected to accelerate over the next decade. However, overcoming cold-climate performance challenges and reducing installation costs will be critical for wider adoption. Additionally, the environmental benefits of heat pumps will remain limited unless the electricity grid expands its capacity and transitions to cleaner energy sources. As with EVs, maximizing the advantages of electrification hinges on decarbonizing upstream electricity generation.
References
- “Why heat pumps are still so hot in the US”, by Casey Crownhart — MIT Technology Review AI, 2026-07-16T10:00:00.000Z (ARR)
- Source URL: https://www.technologyreview.com/2026/07/16/1140505/heat-pump-sales-us/
Frequently Asked Questions
- Can heat pumps be used in cold regions of Japan?
- Modern cold-climate heat pumps can operate efficiently at outdoor temperatures as low as -20°C, but efficiency decreases under such conditions. Supplemental heating may be necessary during harsh winters in areas like Hokkaido. High-capacity models specifically designed for cold regions are available in Japan.
- Why are heat pump sales growing in the U.S. despite the expiration of tax credits?
- Key reasons include: 1) Increased consumer and installer awareness during the 2023–2025 tax credit period; 2) Rising natural gas prices and stable electricity costs enhancing heat pump affordability; 3) Continued state and utility rebates; and 4) Growing concerns over climate change and stricter building electrification regulations.
- How much does it cost to install a heat pump?
- In the U.S., heat pump installation typically costs between $5,000 and $12,000, which is higher than the $3,000–6,000 cost for gas furnaces. However, lower operating costs often allow consumers to recover the investment within several years. In Japan, subsidies can reduce the cost to approximately ¥500,000–¥800,000 for certain models.
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