Heat pumps, electric water heaters continue to gain ground: reports

Heat pumps and electric water heaters keep taking a bigger share of the market, according to new industry shipment data. In July, heat pumps made up close to half of all heating and cooling units shipped, and shipments were up 17.6% from a year earlier, the second-best July on record. Electric water heaters outsold gas water heaters by about 52,000 units that month, even though electric sales dipped slightly compared to last year. Looking back over a decade, heat pump shipments are up nearly 77% since 2016, and electric water heaters are up 23% over the same stretch.

Manufacturers have also been improving heat pump water heater technology, adding new storage tank designs and features that let the units run at different times of day to match demand on the power grid. These models, once mostly found in apartment buildings, are starting to show up in commercial kitchens and other small business settings too.

One change worth knowing about: federal tax credits for heat pump water heaters expired at the end of 2025, and that already cooled demand for them. Even so, industry analysts expect growth to continue, partly because some states are adopting building codes that push new construction toward all-electric equipment or refrigerants with a lower climate impact, New York among them. Despite all this, gas furnaces are not going away soon — their shipments are at a near-record high too, so for now, both technologies are being bought in large numbers, and which one makes sense depends on your own home, climate, and local incentives.