The Install Market Shrank. Here Is What That Means for Your Marketing Budget.

If it feels like your company is working harder than ever for less money, you are not imagining it and you are not doing it wrong. We talk to home service owners every single day, across hundreds of companies in plumbing, HVAC, electrical, roofing and restoration, and the same sentence keeps coming up in different accents: “We are as busy as we have ever been and the bank account does not show it.” That is not a personal failure. It is what the market actually did over the last twenty-four months, and almost nobody is saying it out loud.

Here is the honest version, with the receipts. Then here is what to do about it, because the market shrinking does not mean your company has to.

Key takeaways

• Home service companies feel busier but poorer because the replacement market measurably shrank over the last twenty-four months while costs kept rising faster than prices.
• AHRI data reported by ACHR News shows central air conditioner and heat pump shipments fell 20% from 2024 to 2025, from 9.68 million units to 7.75 million.
• Housecall Pro’s 2026 home service spending report found 88% of HVAC jobs and 87% of plumbing jobs are now repairs, and 77% of homeowners are delaying or reducing projects because of cost.
• Analysis of AGC, ABC and Bureau of Labor Statistics data reported by ACHR News found construction input prices rose nearly 7% year over year while contractor bid prices rose only 3.6%.
• Local Services Ads lead costs are up roughly 40% since 2023, contractor participation jumped from 28% to about 70%, and two thirds of contractors report lead quality getting worse.
• A shrinking market rewards converting better rather than spending more: follow up on unsold estimates, fix a missed-call rate around 27%, market repairs, and build reviews.

The replacement market got smaller. Measurably.

Equipment shipments are the cleanest signal in this industry because they are counted, not surveyed. According to AHRI data reported by ACHR News, central air conditioner and air-source heat pump shipments fell 20% from 2024 to 2025, from 9.68 million units to 7.75 million. That was not a blip. Through March of this year, air conditioner shipments were down another 13.4% year to date and gas furnaces down 13.7%.

The job mix moved with it. Platform data from Housecall Pro’s 2026 home service spending report found that 88% of HVAC jobs and 87% of plumbing jobs are now repairs rather than replacements. Same report: 77% of homeowners say they are delaying or reducing the scope of projects because of cost.

This is not only an HVAC story. The Harvard Joint Center for Housing Studies projects homeowner improvement spending growth decelerating to roughly 1.8% and then 0.5% by early 2027, which is below inflation. In plain terms, that is a flat market in real dollars. On the electrical side, the 2026 Profile of the Electrical Contractor found the share of firms earning under $1 million rose from 42% to 49%, and maintenance and repair work has now passed new construction as the larger slice of revenue.

Meanwhile your costs did not get the memo

This is the number that explains the feeling in your gut. Analysis of AGC, ABC and Bureau of Labor Statistics data reported by ACHR News found construction input prices rose nearly 7% year over year, while contractor bid prices rose only 3.6%. In the first four months of this year, input prices climbed more than in the prior three years combined. Copper and brass up 20%, steel up 13%, aluminum up 37%, diesel up 74%.

That gap between what you pay and what you charge is not a mystery or a management flaw. It is roughly three points of margin the entire industry gave away at once, because everyone was afraid to be the first to raise prices into a softening market.

Why “just get me more leads” stopped working

When the pool of big jobs shrinks and nobody lowers their growth target, every company in your market bids harder for the same phone call. That shows up in your ad account before it shows up anywhere else. Local Services Ads lead costs are up roughly 40% since 2023, contractor participation jumped from 28% to about 70%, and two thirds of contractors report lead quality getting worse rather than better.

So the owner buys more leads, the cost per booked job climbs, and the honest conclusion gets buried under a report full of impressions. We wrote about how to read past that in what your marketing report is hiding, and about the aggregator version of the same trap in shared leads are a bidding war you did not sign up for.

Buying your way out of a demand contraction is the most expensive possible response to it. There are cheaper ones.

What actually works in a market like this

Every one of these is something we implement for home service companies, and every one costs less than another round of lead buying.

1. Convert the demand you already paid for. If 77% of homeowners are delaying, your unsold estimate pile is the largest asset in the building. Most shops have no follow-up system on it at all. That is found money sitting in a folder.
2. Stop leaking calls. Industry benchmarking puts the missed-call rate around 27%. When leads cost what they now cost, a missed call is not an inconvenience, it is a discarded invoice. We laid out the full math in your phone rings, nobody answers.
3. Market the repair, not just the replacement. If nearly nine of ten jobs are repairs, your website, your ads and your service pages should reflect that reality instead of a changeout you wish people were buying.
4. Own the maintenance relationship. The company holding the maintenance agreement is usually the one that gets the replacement whenever the customer is finally ready. In a deferral market, that relationship is the whole ballgame.
5. Protect your reputation like inventory. Research cited by ACHR News found 91% of homeowners rely on online reviews before choosing a contractor, and a separate Housecall Pro survey found 72% would pay up to 10% more for a company with a stronger service reputation. That premium is the cheapest price increase available to you. Start with reviews are your cheapest marketing.

The thing we would tell you on the phone

A shrinking market punishes companies that respond by spending more and rewards companies that respond by converting better. That is not a comfortable message for a marketing company to deliver, because the comfortable message is “increase the budget.” But we have watched enough home service companies through enough seasons to know which one actually holds up when the install market contracts.

What we do for companies in exactly this spot: find where the leads you already bought are dying, rebuild the follow-up around the estimates sitting unsold, get the review engine running on its own, and rebuild the reporting so you can see cost per booked job by channel instead of a slide full of clicks. Sometimes that means we recommend spending less, not more.

If your revenue is flat and your effort is not, call 866-676-9134 or book a free strategy call and we will give you a straight read on where your money is actually going. No pitch, and if the answer is that your marketing is fine and your conversion is the problem, we will tell you that too.

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