North America Tankless Water Heater Market, By Product Type (Electric, Gas), By Application (Residential, Commercial), By Country, Competition, Forecast & Opportunities, 2020-2030F

Market Overview

North America Tankless Water Heater Market was valued at USD 865.36 Million in 2024 and is expected to reach USD 1562.72 Million by 2030 with a CAGR of 10.35%.​ The North America Tankless Water Heater Market is experiencing steady growth, driven by increasing demand for energy-efficient and space-saving water heating solutions in residential and commercial sectors. Consumers are shifting from traditional storage water heaters to tankless systems due to lower energy consumption, reduced utility costs, and longer product lifespans. Technological advancements, including smart connectivity and improved flow rates, are enhancing user convenience and adoption. Growing awareness of environmental sustainability, coupled with government incentives promoting energy-efficient appliances, further fuels market expansion.

Market Drivers

Rising Demand for Energy-Efficient Solutions

Energy efficiency is a primary driver of the North America tankless water heater market. Traditional storage water heaters constantly maintain a reservoir of hot water, consuming energy even when the water is not in use. In contrast, tankless water heaters heat water on demand, significantly reducing energy wastage and lowering utility bills. With growing concerns about climate change and rising electricity and gas costs, both residential and commercial consumers are increasingly opting for these energy-efficient alternatives. Governments and local authorities are also offering rebates and incentives for energy-saving appliances, further accelerating the adoption of tankless systems across the region.

Space-Saving and Compact Design Preferences

The compact and wall-mounted design of tankless water heaters appeals to consumers with limited space, particularly in urban and high-density areas in North America. Unlike bulky traditional storage water heaters, tankless models can be installed in closets, under sinks, or on walls, freeing up valuable floor space. This trend is especially significant in apartments, condos, and commercial buildings where maximizing usable space is a priority. The ease of installation and flexible placement options make tankless water heaters a preferred choice for new constructions and renovations, thereby driving market growth.

Technological Advancements and Smart Features

Technological innovation is significantly boosting the North America tankless water heater market. Modern units are now equipped with smart controls, Wi-Fi connectivity, and mobile app integration, allowing users to monitor water temperature, usage patterns, and energy consumption remotely. Advanced flow rate management ensures consistent water pressure, while integrated safety features protect against overheating and scale buildup. These enhancements improve user convenience, reliability, and energy efficiency, making tankless water heaters more appealing to tech-savvy consumers. Leading manufacturers are investing in R&D to offer innovative products that combine efficiency, safety, and smart home compatibility, further propelling market expansion.

Environmental Awareness and Sustainability Initiatives

Growing environmental consciousness among consumers and businesses is another key driver of tankless water heater adoption in North America. Tankless systems produce lower greenhouse gas emissions compared to conventional storage water heaters, aligning with regional efforts to reduce carbon footprints. Sustainability-focused policies, such as the U.S. Energy Star program and state-level energy efficiency regulations, encourage the use of low-impact appliances. Additionally, the demand for green building certifications and eco-friendly constructions is prompting builders and homeowners to install tankless systems. As awareness of climate change and energy conservation continues to rise, environmentally conscious buyers are increasingly influencing market dynamics, supporting long-term growth.

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Key Market Challenges

High Initial Cost of Installation

One of the primary challenges facing the North America tankless water heater market is the high upfront cost of these systems compared to traditional storage water heaters. Tankless units are technologically advanced and often require professional installation, including potential modifications to existing plumbing and electrical systems. While they offer long-term savings through reduced energy consumption, the initial investment can be a barrier for cost-sensitive consumers, particularly in the residential segment. This high entry cost slows adoption rates, especially in regions where budget constraints outweigh the appeal of long-term energy efficiency benefits.

Limited Flow Rate and Multi-Point Supply Challenges

Tankless water heaters heat water on demand, which can result in limitations in flow rate when multiple outlets are used simultaneously. In households or commercial spaces requiring high water demand at multiple points—such as showers, sinks, and appliances—single-unit tankless systems may struggle to maintain consistent water temperature and pressure. Although high-capacity and dual-unit solutions exist, they add to the complexity and cost of installation. These performance limitations can discourage potential buyers, particularly in larger homes or multi-story buildings, where water demand often exceeds the capacity of a single tankless system.

Maintenance and Scale Buildup Issues

Maintenance is another challenge for tankless water heaters, especially in regions with hard water. Mineral scale buildup in heat exchangers can reduce efficiency, increase energy consumption, and shorten the appliance’s lifespan. Regular descaling and maintenance are required to ensure optimal performance, which may be perceived as inconvenient by consumers accustomed to low-maintenance storage water heaters. In commercial settings, maintenance demands can translate into additional operational costs and downtime. Lack of awareness about proper upkeep can also lead to early system failures, creating hesitancy among first-time buyers and limiting widespread market adoption.

Key Market Trends

Growing Adoption of Smart and Connected Water Heaters

A major trend in the North America tankless water heater market is the rising integration of smart technology and connectivity features. Modern tankless units now often include Wi-Fi capabilities, mobile app integration, and remote monitoring, allowing users to adjust water temperature, set schedules, and track energy consumption from anywhere. These smart systems provide real-time alerts for maintenance needs and enhance energy efficiency by optimizing operation patterns. The trend reflects the increasing consumer preference for IoT-enabled home appliances that offer convenience, automation, and data-driven insights. As smart homes become more prevalent, tankless water heaters are increasingly being positioned as part of an integrated, connected ecosystem.

Preference for On-Demand Hot Water in Commercial Applications

Another emerging trend is the expanding use of tankless water heaters in commercial and institutional settings. Restaurants, hotels, healthcare facilities, and gyms are increasingly adopting these systems to provide consistent hot water on demand while reducing energy costs and space requirements. Unlike residential settings, commercial applications require large-scale, high-capacity units capable of supporting multiple simultaneous outlets. The growing awareness of operational efficiency, lower maintenance needs, and energy savings is encouraging businesses to replace conventional storage water heaters. This trend is particularly strong in energy-conscious regions where commercial operators aim to meet sustainability goals and improve utility cost management.

Shift Towards Eco-Friendly and Low-Emission Appliances

Environmental sustainability continues to shape consumer and industry trends in the tankless water heater market. North American buyers are showing a growing preference for products with low carbon footprints, water conservation features, and Energy Star certification. Manufacturers are responding by designing eco-friendly units that not only reduce greenhouse gas emissions but also optimize energy use through advanced heat exchanger technology. This trend is reinforced by stricter building codes, government incentives, and corporate sustainability initiatives. The emphasis on green technologies has encouraged innovation, driving the development of tankless water heaters that meet both performance expectations and environmental standards.

Integration with Renewable Energy Sources

The integration of tankless water heaters with renewable energy sources, such as solar water heating systems and hybrid electric solutions, is another notable trend in North America. Homeowners and businesses are increasingly adopting solar-assisted tankless systems to further reduce reliance on fossil fuels and cut energy bills. These hybrid setups combine the efficiency of on-demand heating with the sustainability benefits of renewable energy, appealing to eco-conscious consumers and developers of green buildings. This trend reflects the broader shift in North American energy markets toward decarbonization, with tankless water heaters playing a role in enabling energy-efficient, sustainable water heating solutions.

Segmental Insights

Product Type Insights

In the North America tankless water heater market, gas-powered units dominate due to their superior heating capacity, faster flow rates, and suitability for larger homes and commercial applications. They perform efficiently even in regions with colder water, ensuring consistent hot water supply for multiple outlets simultaneously. Gas units also offer long-term cost savings on energy bills compared to electric systems in high-demand settings. While electric tankless heaters are gaining popularity for compact spaces and easier installation, gas models remain the preferred choice for consumers prioritizing performance, reliability, and efficiency, making them the leading segment in the North American market.

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Country Insights

The United States dominated the North America tankless water heater market due to high consumer awareness, strong purchasing power, and widespread adoption of energy-efficient appliances. A growing focus on reducing energy consumption, along with government incentives promoting eco-friendly water heating solutions, has accelerated demand. Residential and commercial sectors are increasingly replacing traditional storage water heaters with tankless systems for space-saving, efficiency, and on-demand hot water benefits. Additionally, the presence of major market players, advanced distribution networks, and technological innovations such as smart and connected units further strengthen the U.S. position, making it the leading country in the North American tankless water heater market.

Recent Developments

• ​In 2023, Rheem Manufacturing Company inaugurated its innovation center in Fort Smith, Arkansas, featuring advanced technology to host seminars, workshops, training sessions, conferences, and other employee-focused events.
• In 2023, A.O. Smith completed the acquisition of Water Tec of Tucson, a manufacturer of water-treatment equipment for residential and commercial applications. This acquisition is set to enhance the company’s footprint on the West Coast and support its overall growth strategy.
• In 2023, Bradford White formed a partnership with Bartle & Gibson, a Canadian distributor specializing in heating, electrical, and plumbing products, aimed at strengthening the company’s presence in the Canadian market.

Key Market Players

• A.O. Smith
• Rheem Manufacturing Company
• Rinnai Corporation
• Bradford White Corporation
• Robert Bosch LLC
• Stiebel Eltron Inc.
• Noritz America
• Navien Inc.
• Eccotemp Systems, LLC
• Chronomite Laboratories Inc.

Report Scope:

In this report, the North America Tankless Water Heater Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·          North America Tankless Water Heater Market, By Product Type:

o   Electric

o   Gas

·         North America Tankless Water Heater Market, By Application:

o   Residential

o   Commercial

·         North America Tankless Water Heater Market, By Country:

o   United States

o   Canada

o   Mexico

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the North America Tankless Water Heater Market.

Available Customizations:

North America Tankless Water Heater Market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

·         Detailed analysis and profiling of additional market players (up to five).