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Fresh 2024 data from AHRI shows that gas storage water heater sales declined again in 2024 to their second lowest level since 2012. Sales of tanked water heaters that burn gas were down by 115,000 units, or 3%, in 2024.
Meanwhile, sales of electric water heaters increased by 3% or 150,000 units in 2024, surpassing the 5 million units sold mark for the first time. 2024 marks the highest total sales number ever for electric water heaters.
These water heater sales trends are a big deal because they show how the second biggest energy end use in the home is likely moving away from fossil fuel combustion and toward electric water heating solutions.
In the past 3 years, the electric storage water heater market has gained 5% market share over gas in the US, 50% versus 45%. This is likely the highest market share electric storage water heaters have had as far back as at least 1954 — the earliest records we could find on water heater shipments.
Electric water heaters sales were also 17% above their 20-year average in 2024, while gas water heater sales were 5% below average.
What’s not clearly shown in these market numbers are heat pump water heater (HPWH) sales (AHRI combines HPWH and resistance products in one category). Heat pump water heaters have emerged in the last 15 years as an efficient water heating option and use 2–5× less energy compared to gas or electric resistance water heaters. HPWHs currently account for about 2% of total national water heater sales, but are the fastest growing water heater segment, growing 35% in 2023 (the last year we have data) to 190,000 units shipped. That year HPWHs represented 4% of all electric water heater sales nationwide.
Also not represented in these numbers are sales of tankless (instant) gas water heaters, whose sales are more challenging to track. Industry estimates put gas tankless at 19% of the overall gas market in 2023, which would be right around 1 million units sold. ENERGY STAR tracks certified tankless water heaters annually and saw a significant decrease in shipments in 2023, but this is likely due to a standards update the year before which meant fewer tankless gas water heaters qualified as ENERGY STAR. Conversations with manufacturers have indicated that the tankless gas water heater market is growing at around 10% annually, which is down (according to these conversations) from 20–30% growth rates in previous years. While a portion of the tanked gas water heater declines are likely a switch to tankless gas, the overall market share trends and record sales of electric water heaters still stand.
The electrification movement seems to be influencing the water heating market.
New construction is seeing a strong move to electric, with building codes in states such as Washington and California heavily encouraging electric heat pumps. In Washington State, for example, building codes incentivizing heat pump water heaters increased the share of electric water heaters installed in new construction from 37% in 2015 to 83% in 2018.
Local air quality agencies are also reducing local air pollutants such as NOx and particulates from water heaters by adopting zero NOx appliance rules. These policies, the first of which are likely to go into effect in California in 2027, will phase out sales of combustion water heaters.
New technologies are also emerging in the water heater market. For example, 120-volt plug-in HPWHs allow for easier and cheaper gas-to-electric conversions by avoiding the need for new wiring, breakers, panels, or even service upgrades. GE also just announced a 120-volt HPWH that can later be converted to a 240V HPWH, expanding the technology options in this product category.
2024’s numbers show a continued macro shift in the water heater market away from gas and towards electric water heating. Building codes, air quality agencies, and new, more efficient technologies like heat pump water heaters are likely driving these trends. With a new water heater appliance standard set to take effect in 2029 that will require significantly higher efficiency for electric water heaters, a large portion of these sales will likely move to heat pumps, possibly making the heat pump water heater the dominant water heater by the end of the decade.
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