North America Heat Pump Water Heater Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2035)
North America Heat Pump Water Heater Market: by Type (Air Source, Ground Source, Hybrid), Application (Residential, Commercial, Industrial), Distribution Channels (Online, Offline/Direct, Distributors/Wholesalers), Technology (Storage, Instant, Hybrid), Organization Size (Small, Medium, Large) and By North America Historical & Forecast Period (2020-2035) Comprehensive Study 2025
Last Updated: 23-07-2025 | Format: PDF | Report ID:10697 | Author: Lily
North America Heat Pump Water Heater Market Outlook 2025
The North America heat pump water heater market is projected to witness robust expansion between 2025 and 2035, driven by rising consumer demand for energy-efficient appliances and supportive government regulations. With enhanced focus on carbon emission reduction and significant innovations by leading manufacturers like Rheem and A. O. Smith, the market continues to evolve rapidly. The increasing inclination toward sustainable heating solutions and the integration of advanced technologies across residential, commercial, and industrial sectors offer lucrative growth avenues, positioning the region as a pivotal marketplace for heat pump water heater solutions.
Latest Market Dynamics
Key Drivers
Government incentives and rebates for energy-efficient water heating installations, including programs in the US and Canada, are significantly boosting adoption. As an example,
reported a surge in sales following new rebate rollouts in 2024.
Rising energy costs are pushing both residential and commercial consumers toward heat pump water heaters. A.O. Smith Corporation announced increased demand for their high-efficiency models as households seek to reduce long-term utility expenses.
Key Trends
Smart and connected heat pump water heaters are trending, offering remote monitoring and energy consumption optimization. GE Appliances showcased new Wi-Fi integrated models mid-2024 to capture this demand.
Adoption of CO2 heat pump water heaters is gaining momentum in North America, as Sanden International expanded its product offerings with improved climate performance in 2024.
Key Opportunities
Expansion into commercial and industrial segments presents large-scale growth potential. Mitsubishi Electric recently secured several contracts to install heat pump systems in hotels and office complexes across Canada.
Emerging retrofit opportunities as older conventional water heaters are replaced in existing homes. Lennox International Inc. rolled out a targeted retrofit program in early 2024, attracting high homeowner interest.
Key Challenges
High initial installation costs remain a barrier for widespread adoption, particularly in the residential market. Stiebel Eltron Inc. continues to address this hurdle by offering flexible financing options in 2025.
Technical skill shortages hampers timely installations and after-sales support. Bosch Thermotechnology launched intensive training programs for installers in the US during Q3 2024 to mitigate this challenge.
Key Restraints
Supply chain disruptions, particularly electronic components, have delayed product delivery times. Panasonic Corporation faced shipment backlogs in late 2024 due to chip shortages.
Low consumer awareness in certain North American regions slows market penetration. Viessmann Manufacturing increased investment in regional marketing campaigns in Q2 2024 to address this issue.
In 2025, air source heat pump water heaters dominated the North American market, owing to their cost-effectiveness and simpler installation compared to other types. Representing a substantial portion of the total market, air source systems are favored in both residential and light commercial applications. Ground source systems also held a notable share due to their efficiency, particularly in colder climates, while hybrid systems garnered increasing attention as consumers seek adaptable, high-efficiency solutions. The introduction of advanced geothermal and water-source models continues to expand choices for commercial and industrial users.
By application, the residential sector continued to lead the North American heat pump water heater market in 2025, accounting for more than half of the market share due to ongoing home renovations and strong emphasis on energy conservation. The commercial segment followed with significant adoption in hospitality, healthcare, and educational institutions, while the industrial segment saw increased uptake in facilities striving for sustainability. Wide applicability and tailored solutions from key players are supporting the robust market participation across these end-user categories.
The North America heat pump water heater market is forecast to rise from USD 1,200 Million in 2020 to USD 3,800 Million by 2035, reflecting an impressive CAGR driven by broader adoption and technological advancements. Key growth inflection points are projected around 2025 as policy incentives ramp up, with accelerating revenue contributions from both residential and expanding commercial installations. The industry’s positive revenue outlook is bolstered by robust manufacturer innovation, increasing retrofitting activities, and growing consumer focus on sustainability, setting the stage for sustained long-term expansion.
Year-on-year growth in the North America heat pump water heater market is anticipated to peak at around 11.8% in 2025, spurred by favorable policy support and wider market awareness. Growth rates are projected to moderate slightly after 2027 as market maturity increases but will remain in the high single digits through 2035. The surge in adoption during the mid-2020s is attributed to new product launches, innovative features, and a rising pace of commercial retrofits, underpinning a strong and stable upward trajectory for the industry.
The US remains the dominant market for heat pump water heaters in North America, accounting for the majority of revenue due to robust consumer awareness and regulatory impetus. Canada has seen notable growth, propelled by governmental efficiency incentives and a colder climate ideal for heat pump applications. Mexico’s market is emerging, driven by increasing urbanization and energy efficiency awareness, though its share remains smaller relative to its northern neighbors. Regional variation in adoption rates reflects the diverse policy and climate landscapes across North America.
In 2025, market leadership is concentrated among a handful of major manufacturers, with Rheem Manufacturing Company and A.O. Smith Corporation collectively accounting for a considerable share due to their wide product range and strong distribution networks. GE Appliances, Bradford White, and Stiebel Eltron are among the other prominent companies competing through innovation, quality, and after-sales support. Intense competition continues to foster new product developments and customer-centric service models in the North American market.
Residential homeowners continue to dominate as the primary buyers of heat pump water heaters, reflecting the strong momentum in home renovation and upgrades across North America. Commercial real estate, comprising hotels, hospitals, and office buildings, follows as key buyers, auguring well for higher-value, large-capacity systems. The industrial segment, albeit smaller, is gaining traction as energy management becomes a core component of manufacturing strategies. Strategic focus on these buyer groups will remain critical for vendors aiming to expand their market footprint.
Study Coverage
Metrics
Details
Years
2020-2035
Base Year
2025
Market Size
Revenue (USD Million)
Regions
US, Canada, Mexico
Segments
By Type (Air Source, Ground Source, Hybrid, Geothermal, Water Source, Exhaust Air), By Application (Residential, Commercial, Industrial, Hospitality, Healthcare, Educational Institutions), By Distribution Channels (Online, Offline/Direct, Distributors/Wholesalers, Retail Stores, Dealer Networks, Contractors/Installers), By Technology (Storage, Instant, Hybrid, CO2 Heat Pump, Split Systems, Ducted), By Organization Size (Small, Medium, Large)
June 12, 2024: Rheem launched a new ENERGY STAR® certified hybrid heat pump water heater featuring ultra-quiet operation and advanced leak detection.
July 5, 2024: Mitsubishi Electric announced a multi-site deployment agreement with a major Canadian hotel chain for their commercial heat pump systems.
August 22, 2024: Bosch Thermotechnology opened a specialized training center for North American heat pump water heater installers in Chicago.
September 1, 2024: A. O. Smith partnered with a US-based utility provider to offer exclusive rebates for homeowners installing smart heat pump water heaters.
October 15, 2024: Stiebel Eltron rolled out their latest modular, tankless CO2 heat pump technology for instant hot water in commercial applications.
Frequently Asked Questions
About the Author
Lily
Senior Market Research Analyst
Lily is a Senior Market Research Analyst specializing in market research, industry analysis, and business consulting across Energy & Power. Lily brings a commercially grounded perspective to sectors shaped by changing demand, innovation, and competitive dynamics, helping turn complex market trends into clear strategic insights for business decision-makers. With 10+ years of experience across research, analytics, and strategic advisory roles, Lily has helped organizations translate data into actionable growth strategies.
Energy & PowerMarket ResearchIndustry AnalysisStrategic Consulting
Key Questions Answered
»What is the market size and growth rate of the global and regional market by various segments?
»What is the market size and growth rate of the market for selective countries?
»Which region or sub-segment is expected to drive the market in the forecast period?
»What factors are estimated to drive and restrain the market growth?
»What are the key technological and market trends shaping the market?
»What are the key opportunities in the market?
»What are the key companies operating in the market?
»Which company accounted for the highest market share?
