Residential Heat Pump Market Grows at 9.7% CAGR Driven by Electrification & Sustainability

🏠 Strong Demand for Energy-Efficient Heating Boosts Residential Heat Pump Market

WILMINGTON, DE, UNITED STATES, December 8, 2025 /EINPresswire.com/ --

According to a recent report published by Allied Market Research, the residential heat pump market size was valued at $33.5 billion in 2021 and is expected to reach $77.5 billion by 2030, growing at a CAGR of 9.7% from 2022 to 2030. This remarkable growth is driven by increasing demand for energy-efficient home heating and cooling technologies, rising environmental awareness, and supportive government regulations promoting clean energy solutions.

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📌 Key Findings

Air source heat pump dominated the market in 2021 and are forecast to be the fastest-growing segment.

The electric powered segment led the market in 2021 and will remain dominant through 2030.

Asia-Pacific is the fastest-growing regional market.

Growing preference for sustainable home heating solutions is expected to drive long-term market expansion.

🏠 Introduction: Why Are Residential Heat Pump in High Demand?

A residential heat pump is an advanced home heating and cooling system that transfers heat rather than generating it, making it significantly more energy-efficient compared to traditional HVAC systems. As a sustainable alternative to air conditioners and furnaces, heat pumps offer:

✔ Lower energy consumption✔ Reduced carbon emissions✔ Efficient temperature control✔ Long-term cost savings

With rising global focus on clean energy and net-zero emissions, homeowners are increasingly switching to heat pumps for both heating and cooling purposes.

🚀 Market Drivers Fueling Growth

The residential heat pump market is witnessing strong, sustained growth due to the following key drivers:

✔ 1. Rising Energy Efficiency Awareness

Homeowners increasingly prefer heat pumps for their significant reduction in electricity bills and environmental footprint.

✔ 2. Government Incentives & Sustainability Mandates

Countries across Europe, Asia-Pacific, and North America offer subsidies, rebates, and policy support to promote heat pump installation.

✔ 3. Growth in Residential Construction

Urban expansion and rising housing projects increase the need for advanced HVAC solutions.

✔ 4. Technological Advancements

Modern heat pumps offer:

Smart thermostat integration

IoT monitoring

Higher heating/cooling efficiency

Eco-friendly refrigerants

✔ 5. Climate Change & Decarbonization Initiatives

Heat pumps play a crucial role in achieving global carbon neutrality targets, replacing fossil-fuel-based systems.

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🔍 Market Overview & Segmentation

The residential heat pump market is segmented based on type, power source, and region.

🔹 1. By Type: Air Source, Water Source & Geothermal

The major categories of residential heat pumps include:

✨ Air Source Heat Pumps (Dominant Segment)

Air source heat pumps held the largest market share in 2021 and are projected to grow the fastest through 2030. Their popularity is driven by:

Low installation and maintenance cost

High energy efficiency

Easy integration with existing home HVAC systems

These systems can absorb heat from outside air even during cooler temperatures, making them ideal for diverse climatic regions.

🌊 Water Source Heat Pumps

These systems draw heat from groundwater or other water bodies, offering higher efficiency but requiring specific site conditions.

🌍 Geothermal Heat Pumps

Also known as ground-source heat pumps, they extract heat from the earth. Although costlier upfront, they provide exceptional long-term performance and minimal environmental impact.

🔹 2. By Power Source: Electric Powered & Gas Powered

The electric powered segment dominated the global market in 2021 and is expected to remain the fastest-growing category. Reasons include:

Expanding renewable electricity generation

Growing shift toward electrification of home heating

Higher efficiency compared to gas-powered units

Governments worldwide are encouraging electric heat pump installations through rebates, tax credits, and green building mandates.

🔹 3. By Region: Asia-Pacific Leads the Global Market

The Asia-Pacific region is projected to grow at the highest pace during the forecast period due to:

🌏 Rapid urbanization🏘️ Growing residential construction🔋 High demand for energy-efficient home solutions🏭 Strong manufacturing base (China, Japan, Korea)

Europe and North America are also experiencing strong adoption driven by sustainability policies, heat pump incentives, and increasing energy prices.

🔧 Competitive Landscape

Key players in the residential heat pump market include:

Midea Group

Johnson Controls

Daikin

Carrier Corporation

Glen Dimplex

NIBE

Stiebel Eltron

Viessmann

Mitsubishi Electric Corporation

Danfoss

These companies focus on smart heat pump technologies, inverter-based systems, eco-friendly refrigerants, and integrated temperature control solutions.

Additionally, the report highlights sales volume, pricing trends, and market share analysis across global regions.

🦠 Impact of COVID-19 on the Residential Heat Pump Market

The COVID-19 pandemic brought significant disruptions to the heat pump industry due to:

❌ Workforce shortages❌ Disturbed global supply chains❌ Temporary shutdown of manufacturing plants❌ Reduced construction and renovation activity

Production dropped sharply in 2020 because many workers migrated back to their hometowns, following lockdown restrictions and income losses. As per the United Nations Industrial Development Organization (UNIDO), around 30%–70% of the pre-pandemic industrial workforce left their employment during lockdowns.

However, the market began recovering in late 2021 as factories reopened, supply chains stabilized, and consumers resumed home renovation and installations. The post-pandemic focus on home comfort and energy savings further accelerated demand.

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📝 Conclusion

The residential heat pump market is poised for strong global growth as homeowners increasingly seek energy-efficient, eco-friendly heating and cooling solutions. With rising electricity availability, government incentives, and advanced HVAC technologies, heat pumps are becoming the preferred alternative to traditional systems.

The dominance of air source and electric-powered heat pumps, combined with rapid growth in the Asia-Pacific region, highlights the market’s shift toward sustainable climate control technologies. As environmental policies tighten and demand for renewable energy intensifies, the residential heat pump industry will continue to expand, creating significant opportunities for manufacturers, installers, and technology innovators.

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About Us

Allied Market Research (AMR) is a full-service market research and business-consulting wing of Allied Analytics LLP based in Portland, Oregon. Allied Market Research provides global enterprises as well as medium and small businesses with unmatched quality of "Market Research Reports" and "Business Intelligence Solutions." AMR has a targeted view to provide business insights and consulting to assist its clients to make strategic business decisions and achieve sustainable growth in their respective market domain.

Pawan Kumar, the CEO of Allied Market Research, is leading the organization toward providing high-quality data and insights. We are in professional corporate relations with various companies and this helps us in digging out market data that helps us generate accurate research data tables and confirms utmost accuracy in our market forecasting. Each and every data presented in the reports published by us is extracted through primary interviews with top officials from leading companies of domain concerned. Our secondary data procurement methodology includes deep online and offline research and discussion with knowledgeable professionals and analysts in the industry.

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