Carrier Global Revises Down Residential HVAC Forecast Amid Weakening Market Conditions
Carrier Global Corporation (CARR) has significantly revised its third-quarter residential HVAC volume forecast downwards, now expecting a decline "much lower than" its previous projection of a 15% reduction year-over-year. This adjustment, announced during the company's presentation at Morgan Stanley's 13th Annual Laguna Conference, signals a deteriorating market environment primarily driven by high interest rates and cautious consumer spending, leading to aggressive distributor destocking.
Carrier Global Revises Down Residential HVAC Forecast Amid Weakening Market Conditions
Carrier Global Corporation (CARR) has significantly revised its third-quarter residential HVAC volume forecast downwards, now expecting a decline "much lower than" its previous projection of a 15% reduction year-over-year. This adjustment, announced during the company's presentation at Morgan Stanley's 13th Annual Laguna Conference, signals a deteriorating market environment primarily driven by high interest rates and cautious consumer spending, leading to aggressive distributor destocking.
The Event in Detail
On September 10, 2025, during its participation in Morgan Stanley's 13th Annual Laguna Conference, Carrier Global Corporation communicated a substantial downgrade to its outlook for the third quarter. The company initially forecast a 15% year-over-year decline in North American residential HVAC volumes. However, due to observed weakening market conditions throughout June and July, this projection has been revised to anticipate volumes "much lower than that" original estimate. Recent trade association data reinforces this downturn, indicating a nearly 30% reduction in industry volumes for July, a trend mirrored in Carrier’s own performance for the month. The company anticipates similar or worse industry volumes for August and September, potentially marking the weakest third-quarter performance for the industry in over a decade.
Financially, Carrier now projects North America residential volumes to decrease by more than 40% in Q3, leading to a total Q3 North America residential sales decline of approximately 30%. This translates to an estimated sales shortfall of approximately $500 million for the quarter, relative to prior expectations. The adverse market conditions are also expected to result in an adjusted Earnings Per Share (EPS) headwind of $0.20 to $0.25.
Analysis of Market Reaction
The primary drivers behind this pronounced market contraction are multifaceted, stemming from persistent macroeconomic pressures. David Gitlin, Chairman and CEO of Carrier Global Corporation, identified the "combination of high interest rates and pressure on the consumer" as increasingly weighing on spending. This has particularly impacted new and existing home sales, consequently delaying residential HVAC activity.
Compounding the issue, distributors are aggressively reducing their inventory levels. Carrier anticipates field inventory levels will be down 15% year-over-year by the end of Q3, reflecting a cautious outlook across the distribution network in response to weaker consumer demand. This combination of reduced end-user demand and proactive destocking by distributors is creating a significant headwind for manufacturers in the sector.
Broader Context & Implications
This negative revision from Carrier Global is likely to exert downward pressure on the company’s stock price (CARR) in the near term and may prompt analysts to re-evaluate their forecasts for the residential HVAC sector. The company’s performance is broadly aligned with the overall industry trend, suggesting a wider economic contraction in this segment. The anticipated decline in North America residential volumes by over 40% for Carrier underscores significant challenges within the housing market and consumer spending on durable goods.
Despite these headwinds, Carrier has reported strong EPS growth, achieving a 17% CAGR since 2022 and over 25% growth in the first half of this year. The company is actively implementing mitigation strategies, including aggressive cost actions such as reducing indirect headcount by over 2,000 and lowering field inventory by $75 million to $100 million monthly in Q3.
Strategically, Carrier is leveraging its strengths in other segments. Its commercial HVAC business is poised for its fifth consecutive year of double-digit growth, driven by robust demand from data centers, healthcare, and electronics manufacturing. Data center sales alone are projected to double to $1 billion this year from $500 million last year. Furthermore, the integration of Viessmann Climate Solutions is progressing, expected to deliver $100 million in revenue synergies this year, with $200 million in cost synergies targeted over three years.
Looking Ahead
Carrier Global is focusing on positioning itself for a stronger recovery, anticipating easier comparisons for North America residential volumes in 2025 and aiming to deliver expected results by 2026. The company remains confident in the continued growth of its commercial HVAC and aftermarket businesses, with investments being made to quadruple capacity for water-cooled and air-cooled chillers in North America and an addition of 1,000 technicians in the U.S. to support commercial growth. New technologies, such as Carrier Energy, are also being field-tested with revenue service expected early next year. While the short-term outlook for residential HVAC remains challenging, the company’s diversified portfolio and strategic initiatives aim to provide resilience and long-term growth opportunities. An updated full-year outlook is expected during its upcoming Q3 earnings call.
