Heat pump vs gas furnace in North Carolina: what homeowners are installing in 2026

The heating season is starting, and with it the months when North Carolina's furnace replacements peak. Two things are different from last winter. The federal tax credit for a heat pump, up to $2,000 a year, ended for equipment put in service after December 31, 2025. And since September 1, 2026, the state's Energy Saver NC rebates no longer pay to replace a gas or other fossil-fuel appliance. The permits filed over the last year show what homeowners did anyway: in Wake County, Greensboro, Gaston County, Brunswick County and Onslow County, 4,335 replacement permits from October 2025 to September 2026 named a heat pump and 3,022 named a gas furnace or gas pack.

Quick answers

Two changes since last winter

The federal credit ended first. The 2025 budget law, Public Law 119-21, closed the energy efficient home improvement credit (Section 25C) for property placed in service after December 31, 2025. It had paid up to $2,000 a year toward a qualifying heat pump.

The state program changed second. Energy Saver North Carolina, the federally funded rebate program run by the Department of Environmental Quality, was open in all 100 counties by February 10, 2026. Households earning under 80 percent of their area's median income can get up to the full cost covered, and households at 80 to 150 percent up to half, with a cap of $8,000 for a heat pump for heating and cooling, done by an approved contractor. On May 29, 2026, the U.S. Department of Energy issued new guidance, and from September 1 every HEAR application that hadn't reached a rebate reservation must follow it: no rebates to replace gas or other fossil-fuel appliances, rebates now allowed to replace older electric equipment with more efficient electric equipment, and insulation and air sealing may be required alongside a heat pump.

What the permits show: heat pumps kept their share

If the end of the credit had pushed homeowners back to gas, the heat pump share would have fallen in 2026. It didn't. From October 2024 to September 2025, 3,739 replacement permits in these five offices named a heat pump and 2,740 a gas furnace or gas pack: 57.7 percent heat pumps. In the next 12 months it was 4,335 and 3,022: 58.9 percent. Heat pump permits rose 16 percent and gas furnace permits 10 percent, while all permits in the same offices rose 7.7 percent.

The season matters more than the year. From February to September, heat pumps are about 60 percent of replacements. When the weather turns, furnaces fail: gas furnace permits averaged 260 a month from October to January against 230 the rest of the year, and in November gas furnaces outnumbered heat pumps, 223 to 198 in 2024 and 300 to 247 in 2025. (In November 2023, the first full month in these records, it was 259 to 221.)

Geography decides most of it. Brunswick and Onslow counties filed 42 gas furnace permits between them all year, against 1,140 heat pumps. Greensboro and Gaston County, in the Piedmont, are the opposite: most replacement permits there named a gas furnace, though Greensboro's heat pump share rose from 38 to 42 percent. Wake County sits between, at two heat pumps for every furnace.

What's being installed

• Size. The median system on both sides is 2.5 tons, and the most common heat pump size is 2 tons (2,516 heat pump permits state a size). The median furnace is 70,000 BTU (793 furnace permits state one).
• Furnace efficiency. Of the 318 furnace permits from the last 12 months that state an efficiency, 161 name a 90-percent-plus condensing furnace and 157 an 80 percent one: about an even split.
• Gas packs. About a quarter of gas jobs are packaged outdoor units, a gas pack (1,417 of 5,762 gas permits over the two years), against 7 percent of heat pump jobs (535 of 8,074).
• Dual fuel. 78 permits in the last year say dual fuel or hybrid, a heat pump with a gas furnace as backup, down from 93 a year earlier. Another 213 name both a heat pump and a furnace, such as a house with one system of each.
• Switching fuel. Only 14 permits in the last year say they replaced a gas or oil furnace with a heat pump, and 18 the year before. Almost every replacement keeps the fuel the house already had.

What it means for your business

• HVAC contractors: November is furnace month. In the Piedmont, more than half of replacements are gas, and the mix shifts toward gas from October to January everywhere we can measure. On the coast it's almost entirely heat pumps all year.
• Gas and plumbing contractors: with so few fuel switches, the gas furnace base isn't shrinking. Gas furnace permits rose 10 percent this year, and a quarter of gas jobs are outdoor gas packs.
• Electricians: a homeowner switching from gas to a heat pump needs a circuit for the air handler, and several of the permits that describe a switch mention one. Switches are rare, but each one adds electrical work.
• Suppliers and distributors: stock follows the region. Heat pumps dominate on the coast and in Wake County, and gas furnaces in Greensboro and Gaston. The typical system is 2 to 2.5 tons, the typical furnace about 70,000 BTU, and 80 percent furnaces sell about as often as 90-percent-plus ones.
• Homeowners: the price of the two is about the same in Wake County, so the choice usually comes down to what the house already has. Get the mechanical permit, which is required for a like-for-like change-out. If you're income-eligible, check Energy Saver NC before you sign: since September 1 it pays for electric-to-electric upgrades but not for replacing a gas system.

Find these permits in TarSignal

Every permit counted here is in TarSignal's Permit Search. Search the work description for "heat pump", "furnace" or "gas pack" to see each job, its address, its declared value and the contractor, in any office we cover, or set a Project Alert for new ones. Our HVAC permits page has the counts by office.

How these numbers were counted

• Offices: Wake County, Greensboro, Gaston County, Brunswick County and Onslow County, the offices whose records describe the equipment on trade permits and whose volume held steady from October 2024 to September 2026. Left out: Mecklenburg (its change-out permits rarely name the equipment), Raleigh and Durham (few separate trade permits), Alamance (its records changed), and Cary, Asheville and New Hanover (our coverage there grew in the period). In Greensboro about half of all permits carry a description, and the counts come from those.
• Windows: October 1 to September 30, by the date a permit was filed, or issued where an office records only that date (Brunswick County and Greensboro). Our records begin in late October 2023, so full-year comparisons start in October 2024; November 2023 is shown only as a month.
• Classification, from each permit's work description: a heat pump permit says "heat pump" or "HP"; a gas permit says "furnace", "gas pack" or "gas package", or "gas/electric". Ductless mini-splits are counted when the description calls them a heat pump. Permits naming both (213 in the last year) are counted separately and left out of the shares. About 2 percent of gas permits are an air conditioner replaced on an existing furnace, a gas-heated home.
• Left out: withdrawn, voided and cancelled permits, permits with a commercial permit type, and new houses. Pool, well and sump pumps and water heaters are not counted as heat pumps.
• Costs are Wake County's declared values on permits that state one (1,477 heat pump and 704 gas furnace system permits), excluding the 22 that replace only an air conditioner on an existing furnace. Brunswick County's trade permits often carry the whole project's value, so its values aren't used.
• Fuel switches are permits whose description says a gas or oil furnace, gas pack or gas heat was replaced with or converted to a heat pump. Sizes, efficiencies and dual-fuel counts are from the descriptions that state them.
• Program details are from DEQ's February 10, 2026 announcement and Energy Saver North Carolina's program updates page, and tax credit dates from the IRS's fact sheet on Public Law 119-21 (FS-2025-05), as published in October 2026. The permit rule is as written in G.S. 160D-1110. These numbers line up with the end of the credit and the change in the rebates; they can't show why each homeowner chose what they did.