• Home
  • Industry Insight Report: HVAC & Plumbing Contractors Q3-2025

Industry Insight Report: HVAC & Plumbing Contractors Q3-2025

HVAC Industry Insight Report

The HVAC and plumbing industry remains resilient entering the third quarter of 2025, with notable shifts in heating system preferences and continued labor market strength. At Lion Business Advisors, we’ve seen steady buyer interest, especially in contractor businesses with service agreements, recurring maintenance revenue, and experienced crews.

Major Industry Development

The adoption of heat pump technology continues to reshape the residential HVAC landscape. According to Vertical IQ, the share of new single-family homes using air or ground source heat pumps rose from 23% in 2000 to 47% in 2024. In warmer U.S. regions, like the South Atlantic and East South Central, heat pump usage reached over 75% of new home builds. This trend reflects both changing consumer preferences and regulatory incentives favoring energy-efficient systems. For HVAC contractors, especially those operating in Texas and the broader southern region, adapting service capabilities to meet heat pump demand is increasingly important. Buyers are placing higher value on businesses that already service modern systems and demonstrate readiness for upcoming efficiency regulations.

Employment and Wage Trends

Employment by plumbing, heating, and air-conditioning contractors rose 1.5% year-over-year in July, with 33.9% total growth over the past decade, well above the 13.0% increase seen across all private employment. Over the last three years, employment in this sector grew 8.5%, more than double the private sector’s 3.7% growth. Wage trends remain strong as well. Average hourly wages reached $39.30 in July, up 3.3% from the prior year. Over the past ten years, wages have increased 50.2%, closely tracking national private-sector trends. These indicators continue to build buyer confidence in the long-term viability and labor strength of the industry.

Industry Forecast

Vertical IQ forecasts a 5.07% compound annual growth rate (CAGR) for the U.S. HVAC and plumbing contractors industry from 2025 to 2029. This growth trajectory outpaces projected overall economic expansion, reflecting consistent demand for both new system installations and repair/maintenance work. In Texas, population growth and extreme seasonal temperatures continue to drive high utilization and service demand.

Outlook: A Strong Seller’s Market Continues

The current M&A landscape remains favorable for HVAC and plumbing business owners considering a sale. It’s a seller’s market for well-run firms with documented financials, recurring revenue, and strong management teams. We’re seeing active interest from individual owner-operators using SBA financing, strategic acquirers expanding into new markets, and private equity groups executing roll-up strategies. Premium valuations are being paid for businesses that can demonstrate technician retention, customer diversification, and the ability to support post-sale transition or absentee ownership.

Looking ahead to Q4 and beyond, sellers who begin preparing now will be best positioned to capitalize on market momentum. Understanding your company’s value and enhancing its sellability can create a significant advantage in today’s active buyer environment.

👉 Get Your Sellability Score Today

  • Lion Business Advisors’ quarterly industry insights incorporate data and trends sourced from internal deal flow and buyer activity, Vertical IQ, and market comparables from platforms such as Axial and BVR (Business Valuation Resources).