What You Need to Know About HVAC Replacement & Costs

In 2016, American Home Shield received more than 1.2 million service calls related to heating and air conditioning units. Of the heater-related requests, 3 percent resulted in replacement; for the A/C requests, it was a whopping 8 percent.

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If you’ve found yourself eyeing your increasingly undependable unit and wondering about the average cost to replace heater and air conditioning systems lately, keep reading.

Unfortunately, we can’t give you a definite HVAC replacement cost to expect to pay. However, we can give you a cost range and some insight to help you determine if a replacement is necessary as well as some factors to consider that will determine your final cost. We’ll also share some strategies to use to recoup some of the expense of installing a replacement HVAC.

How Much Does a New HVAC System Cost?

How much does a new HVAC system cost? As of 2021, the national average cost for an HVAC replacement was $4,631. The highest cost for an HVAC replacement is about $8,900, while the lowest HVAC replacement cost is about $3,350. In a nutshell, typical replacement and repair costs for cooling units range anywhere from $135 to $3,919 in most parts of the country. For heating units, that range goes from $120 to $4,000.* So if it looks like you need a full replacement, it’s a pretty sure bet you’ll be spending thousands. Some factors that influence your overall cost include:

  • The type and size of the unit that you need.
  • The type of fuel that is required for the unit.
  • Whether you need additional HVAC repairs, replacements or additions (such as ductwork).
  • How energy efficient the new unit is.

Installation labor is one of the biggest costs of installing a new furnace or AC, with contractors charging an average of $75 an hour. Expect about a third of the cost of a new unit to go to labor. Depending on where you live, you may be able to save on installation costs in the winter, when fewer people are having air conditioners installed (or summer for furnaces).

How Do You Know if You Should Replace Your HVAC System?

It may be obvious: Your unit is nearly ancient, making very unnatural sounds and has required several repairs over the past couple of years. Or maybe it’s not so obvious: Your energy bills are costing more than they usually do this time of year, and you find yourself constantly adjusting the thermostat. It’s not always easy to decide when your HVAC system needs an upgrade.

Some signs it’s time to replace your HVAC include:

  • Weak airflow from the vents
  • Grinding, squealing, grating or other weird sounds
  • Blowing warm air instead of cool or cool instead of hot
  • Moisture where it shouldn’t be, either from a leak in the outdoor unit or increased humidity in the ductwork
  • Smelly ductwork — mildew or mold smells are common if the ductwork is getting moist, but burning smells are also a bad sign and a warning signal that your AC or furnace could be dangerously malfunctioning

The Department of Energy recommends that homeowners replace their HVAC systems every 10 to 15 years. That’s typically how long it takes for major components in modern systems to show wear to the point where it’s more cost-effective to replace them. And when you’re staring at that big HVAC replacement bill in the face, remember — newer systems are more efficient, so at least your power bill will be lower.

What to Look For When Buying a New HVAC System?

Deciding which unit to purchase can be overwhelming, to say the least. Here are some important considerations:

  1. Start and end with the right professional contractor. Your unit’s efficiency can be determined by its installation, so it’s imperative that you work with a reputable contractor. Interview several candidates and get detailed quotes from each.

  2. Determine the correct unit size. Make sure your contractor performs a load calculation, taking into account the size of your house, climate, roof material, orientation of the unit, number of units, etc. The correct unit size will depend on your climate zone and the square footage of your house, but the best way to get an accurate size estimate is to have your home professionally evaluated. An HVAC installation professional will consider such factors as whether or not your home has a crawlspace or basement, how much insulation there is in the attic, how many floors it has, the number of people living in the home, what kind of doors and windows it has, how high the ceilings are and what your desired indoor temperature is. Most homes will need a unit sized at 30 to 60 BTUs per square foot. 

  3. Don’t ignore the SEER rating. The higher the Seasonal Energy Efficiency Ratio (SEER) rating, the more efficient the unit will be. Although a unit with a higher SEER rating may be more costly, it will end up saving you more money in the long run. And if you buy a more energy-efficiency model, you can take advantage of the federal residential energy efficiency tax credits, as well as any state or local incentive or rebate programs in your area.

  4. Search for rebates. To offset some of your HVAC replacement costs, see if your state offers rebate incentives. Local utility companies also offer rebate programs for high-efficiency consumer appliances, so don’t forget to call them up and ask.

How to Save Money on a New Furnace or Air Conditioner?

If you’re looking to cut the cost to replace an air conditioner in 2021, you can take advantage of the residential energy efficiency tax credit, which has been extended through December 31, 2021. You need to get either a split or packaged system that meets certain energy efficiency requirements. For a split system, you would need a SEER rating of 16 or higher, or an Energy Efficiency Ratio (EER) rating equal of 13 or higher. For a package system, you would need a SEER rating of 14 or higher, and an EER rating of 12 or higher. 

Air conditioner units labeled Energy Star Most Efficient meet the requirements for the tax credit. The average tax credit is about $300. You can’t use a tax credit to increase the size of your refund, but you can use it to reduce your overall tax burden — so if you expect to have a tax bill for 2021, it might be a good year to replace your air conditioner, especially if it’s on its last legs, anyway. You can also still get federal tax credits for high-efficiency furnaces, like geothermal heat pumps, boilers, some kinds of furnaces and biomass stoves. There are also often residential efficiency tax credits and rebates available on the state level. Furthermore, you may be able to get money back for your installation of a new AC or furnace in the form of a rebate from your local utility company.

Is It Cheaper to Replace a Furnace and an AC Together?

Furnaces usually last longer than air conditioners — the average AC unit lasts 10-15 years while the average furnace lasts 15-30 years. And it’s not necessary to replace both the furnace and the AC at the same time. So, if your furnace still has plenty of life left, you can keep it for a while.

It will obviously cost more to replace both a furnace and an AC together than just the AC. But if you do happen to need both, you could save significantly by doing them both at the same time. And if you’re installing a new, high-efficiency AC, it’s a good idea to pair it with a high-efficiency furnace. Keeping the old furnace could decrease your efficiency savings, and could even cause problems with the new AC.

What to Keep in Mind After the Replacement? 

Nothing says “investment” like a home system that you paid a pretty penny for. Unfortunately, regardless of how much you end up spending on your HVAC replacement, it can still have some hiccups in performance every once in a while. So why not protect your investment — and your budget — from the occasional unexpected costs? 

With a Systems or Combo plan with American Home Shield, your budget is protected when your HVAC gives you trouble from normal wear and tear. Explore plan options and get a quote today.

*As reported in “A Study of Homeowners’ Appliance and Home Systems Service Experiences,” a nationwide survey of homeowners conducted in 2014 by Decision Analyst for American Home Shield. Further reproduction is expressly prohibited.

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