Theme this issueFor a year the stories in this newsletter have been about cost — antitrust suits, refrigerant, price hikes, the phone you're not answering. This week the lens shifts to demand, because heading into fall replacement season the forces deciding whether homeowners actually spend are all moving at once. The federal tax credit that helped you close efficiency upgrades is gone — 25C and 25D expired December 31, 2025, and this is the first full fall you'll sell without them. Harvard's remodeling forecast has flattened to near-zero real growth into early 2027, driven by the same interest rates keeping homeowners in place. A new tariff landed in late July, stacking a fresh layer on equipment costs right as the pricing story was already at a boil. The Atlantic — historically quiet all summer — is finally waking up just in time for the September peak, which may pull storm demand back toward the coast after an inland-heavy year. And underneath all of it, the way customers find you is changing shape: two of every three Google searches now end without a click, and AI is answering the "who fixes this" question before your website ever loads. Cost you can manage with quote discipline. Demand you manage by being the shop that's easiest to find, easiest to finance, and honest about why the number is what it is.
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The federal tax credit is gone — this is your first fall selling without 25C or 25D
Section 25C / 25D expiration under OBBBA · HVAC Base, GE Appliances Air & Water, MnASHP
The single biggest change to your fall sales conversation already happened, and some of your competitors haven't adjusted to it. The One Big Beautiful Bill Act (signed July 4, 2025) terminated the two federal residential energy credits for anything placed in service after December 31, 2025. Gone: the 25C Energy Efficient Home Improvement Credit — 30% of installed cost up to $2,000 for a qualifying heat pump, $600 each for a high-efficiency AC or furnace, inside a $3,200 annual cap — and the 25D Residential Clean Energy Credit, which gave 30% with no cap on geothermal, solar, and battery systems. The trap that will bite homeowners who dawdled: the test is placed in service, not purchased — a system bought in late 2025 but installed in 2026 does not qualify. What survives OBBBA are the IRA rebate programs administered by states: HEEHRA/HEAR (income-qualified, up to $8,000 toward a heat pump for lower-income households) and HOMES (open to all homeowners, tied to measured energy savings), which stack on top of state and utility rebates that vary widely by market.
Why it matters: For two years "there's a federal tax credit" did real work on your close — it shrank the effective price and gave the homeowner a reason to act now. That lever is gone, and pretending otherwise (or worse, quoting a credit that no longer exists) is a compliance and trust problem waiting to happen. Three moves for fall. First, retrain every comfort advisor this week on what actually expired versus what remains — the credits are gone, but the HEEHRA and HOMES rebates and your local utility programs are not, and for the right customer those can beat what 25C ever offered. Know your state's program status cold, because availability differs market to market. Second, rebuild the value pitch around financing and total cost of ownership, not a vanishing credit — a lower monthly payment and an energy bill that drops are levers you still control. Third, if you're a marketing-driven shop, scrub your website, landing pages, and ad copy for "federal tax credit" language that's now inaccurate — stale incentive claims are exactly what a state AG (see the enforcement thread from prior issues) looks for. The shops that win this fall are the ones who turned "the credit is gone" into "here's what still saves you money," fast.
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Harvard's remodeling forecast just flattened to near-zero real growth
Leading Indicator of Remodeling Activity (LIRA), July 2026 release · Harvard Joint Center for Housing Studies
The demand backdrop for everything else in this issue got a number this month. The Harvard Joint Center for Housing Studies' July 23, 2026 LIRA projects annual homeowner improvement and repair spending will decelerate from 1.8% year-over-year growth in Q2 2026 to just 0.5% by Q1 2027 — explicitly below overall inflation, meaning remodeling activity is essentially flat in real terms. Total spending sits around $523 billion, up only marginally from $521B a year earlier. The Center is blunt about the cause: flat remodeling permits and stagnant retail spending on building products signal weak homeowner appetite, and the whole category tracks the health of the broader housing market — which remains frozen by elevated interest rates and low home sales. Director Chris Herbert's line: without a sustained construction rebound, "we're likely to see remodeling spending remain in this low-growth range for the near future."
Why it matters: A flat market rewards a different playbook than a growing one. When rising demand isn't lifting every boat, growth has to come from share — taking the job your competitor quotes, and getting more revenue per customer you already have. Practically, that means three things this fall. Lean into non-discretionary work, which holds up when discretionary remodels stall: a failed compressor, a leaking water heater, an electrical-panel safety issue — homeowners who won't fund a kitchen still can't live without heat. Sell the repair-versus-replace conversation honestly and let financing carry the replacement, because a homeowner staying put for years (exactly what high rates produce) is a homeowner who benefits from a system that lasts, not a patch. And defend your maintenance-agreement base hard — recurring service revenue is the part of your book that doesn't care what the LIRA says, and in a flat year it's the difference between steady and scary. This is not a recession call; it's a plateau, and plateaus reward operators who compete on execution rather than riding a wave.
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A new tariff landed July 24 — another layer on equipment cost, from a different direction
Section 301 tariffs on imported components · ACHR News, ACCA HVAC Blog, Money
The equipment-cost story keeps finding new sources, and this one is federal trade policy. Effective July 24, 2026, a new round of Section 301 tariffs (Trade Act of 1974) took effect on imported goods tied to forced-labor enforcement rules: 10% on imports from ~60 economies that adopted matching prohibitions (Canada, Mexico, UK among them) and 12.5% on those that haven't — a group that includes China, the EU, and Japan. For HVAC specifically, China is a major source of compressors, motors, control boards, and copper components, so those parts face the added duty. One important carve-out: goods already hit by Section 232 tariffs (steel, aluminum, copper derivatives) are exempt from this new layer, so it's not simply additive on everything. Notably, these Section 301 duties replaced a broader 10% global surcharge the Supreme Court struck down in February 2026 as an overreach of emergency (IEEPA) powers — so the mechanism changed, but the cost pressure didn't go away. ACHR is candid that the exact price impact is hard to pin down, because it depends entirely on where each manufacturer sources.
Why it matters: This is the same lesson as the manufacturer price hikes and the antitrust suits, arriving through a third door: your equipment and parts costs are being pushed up by forces you don't control and can't fully predict, and the defense is mechanical, not emotional. Don't try to forecast the tariff's precise effect — react to your actual invoices. Concretely: keep the 7–14 day expiration window on every equipment-heavy estimate (a policy that already earned its place this year) so a mid-cycle cost change doesn't eat the job; ask your distributors directly which lines are exposed to the new component duties, because two systems on your truck may now move on different cost curves depending on sourcing; and re-price your top-installed systems against live cost monthly, not quarterly. For the customer conversation, the tariff is another external, verifiable reason prices are up — federal trade policy, not your markup — which, told honestly, keeps sticker-shock conversations pointed at value and financing rather than your integrity.
Sources (3)
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The Atlantic is finally waking up — and storm demand may swing back toward the coast
2026 Atlantic hurricane season, late-August reactivation · NOAA, Colorado State University, Local 10
All summer this newsletter argued that 2026's storm money was inland — derechos, not hurricanes — and for months the data agreed: the Atlantic has run its slowest season in nearly 40 years by overall tropical activity, under a below-normal NOAA outlook shaped by unfavorable conditions. That lull is now ending on schedule. As of late August, forecasters are tracking a strong tropical wave off Africa with a roughly 40–50% chance of developing within the week — a potential first Cabo Verde storm of the season (next name up: Dolly) — with some models hinting at hurricane-force strengthening in the southwestern Atlantic within about ten days. Historically, the season's statistical peak is September 10, and a quiet August is a notoriously poor predictor of a quiet September. The takeaway isn't panic; it's timing: the tropical restoration work that never showed up this summer may arrive right as the inland convective season winds down.
Why it matters: For roofing, exteriors, water-mitigation, and standby-power operators, the shift from inland to coastal changes where to pre-position, not whether to prepare. Three moves before the peak. If you serve or can mobilize to a coastal or Gulf/Southeast market, get your crews, materials, and subcontractor agreements lined up now, while the tropics are still quiet — capacity you lock in during the lull is capacity you're not scrambling for after landfall. Keep the documentation-grade inspection discipline this newsletter has hammered all season (dated photos, moisture readings, measurements), because carriers in a heavy 2026 loss year are scrutinizing every scope and the well-documented supplement is the one that gets paid. And market standby generators and surge protection into any coastal footprint ahead of a threat, not after — the most motivated generator buyer is one watching a cone approach, and that window is open now precisely because it's been quiet. For inland operators, the flip side: the convective season that drove this summer's work is winding down, so collect on the long-tail restoration jobs still open before attention (and adjusters) rotate to the coast.
Sources (3)
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Two-thirds of searches now end without a click — AI is answering "who fixes this" before your site loads
Zero-click search & answer-engine optimization · SparkToro/Datos, Bain & Company, home-services AEO analyses
The pipe most of your leads flow through is quietly narrowing, and it's the story a marketing-driven shop can least afford to miss. About 68% of U.S. Google searches now end without a click on any result — up from 60% in 2024 and 49% in 2020 — and when an AI Overview appears at the top, the zero-click rate jumps to ~83% (and ~93% in Google's "AI Mode"), per Bain & Company. AI Overviews already trigger on roughly half of U.S. queries and keep expanding. Pages that do still rank are seeing click-through rates fall by as much as ~61% when an AI Overview sits above them, and an estimated 37% of consumers now start a search inside an AI tool rather than a search engine at all. Homeowners have shifted from typing "AC repair" to asking full questions — "why is my AC blowing warm air and who can fix it tonight near me" — and the engine increasingly answers and recommends before anyone reaches a website. The one bright spot in the data: traffic that does arrive from AI answers converts several times better than ordinary organic clicks, and businesses cited inside AI Overviews earn meaningfully more clicks than uncited competitors — so presence in the answer is the whole game.
Why it matters: If customers decide who to call inside an AI answer, your job is to be in that answer — this is "answer-engine optimization" (AEO), and for home services it rewards fundamentals you can actually control. Get your structured data right: LocalBusiness and FAQ schema make your pages machine-readable so an AI can lift your answer. Lock down NAP consistency (name, address, phone identical across your site, Google Business Profile, and every directory) — inconsistent entity data is the fastest way to get left out of a recommendation. Rewrite your top service pages answer-first: lead the page with a direct, plain-language answer to the exact question a homeowner asks (then the detail), because that's the chunk an AI extracts. Build out the top 15–20 real questions for each trade you run — the pain-driven, "it's 9pm and my heat is out" questions — as clean FAQ content. And because an AI recommendation is worthless if the phone rings out, this closes the loop with the missed-call and voice-AI story from prior issues: the AI sends the lead, but you still have to answer it. Falling organic traffic is real, but the leads that come through AI are higher-intent and cheaper over time than paid — which makes AEO one of the better places to put marketing effort this fall.
This issue's to-do list
Do this before month end
- Retrain your sales team on the tax-credit reality and scrub your marketing — 25C and 25D expired December 31, 2025 (placed-in-service, so 2025 buys installed in 2026 don't qualify). Rebuild the pitch around financing, total cost of ownership, and the HEEHRA/HOMES and utility rebates that do remain, and purge any "federal tax credit" claims from your website and ads before they become a compliance problem.
- Shift to a flat-market playbook — Harvard's July LIRA has remodeling growth falling to 0.5% by Q1 2027, below inflation, on frozen home sales and high rates. Compete on share: prioritize non-discretionary repair/replace work, sell repair-vs-replace honestly with financing, and defend your maintenance-agreement base as the revenue that doesn't care about the housing market.
- React to invoices, not tariff headlines — new Section 301 duties (10%/12.5%, effective July 24) hit imported compressors, motors, control boards, and copper, with sourcing determining who's exposed. Ask distributors which lines are affected, keep 7–14 day estimate expiration windows, re-price top systems against live cost monthly, and use the tariff as an honest external reason for higher prices.
- Pre-position for a coastal storm season while it's still quiet — the Atlantic is running its slowest in ~40 years but reactivating ahead of the September 10 peak (a potential first Cabo Verde storm). If you serve coastal markets, line up crews, materials, and standby-generator inventory now; keep documentation-grade inspections; and inland operators should collect on open convective-season restoration jobs before attention rotates.
- Start on answer-engine optimization — ~68% of searches are now zero-click (~83% with an AI Overview), AI Overviews hit ~half of queries, and CTR on ranked pages drops up to ~61% beneath them. Fix LocalBusiness/FAQ schema, lock down NAP consistency, rewrite top service pages answer-first, build out your trade's top 15–20 homeowner questions — and make sure someone actually answers the phone when the AI sends the lead.
Compiled August 31, 2026. Figures reflect the cited sources. Tax-credit, rebate, tariff, remodeling-forecast, and search-behavior data are drawn from public reporting and may vary by market, source, and your specific situation — verify current incentive availability in your state, your own equipment and parts pricing, and any tax or regulatory question before acting or advising a customer. Hurricane and seasonal figures reflect reporting as of late August 2026 and change quickly.