Heat pump vs. furnace: which is cheaper to run?

Last updated: October 11, 2026

Your furnace is on its last legs, and one contractor says “just replace it” while another says “switch to a heat pump.” Both can be right. Which one is cheaper depends on what you heat with today, what electricity and gas cost where you live, and how cold your winters get. Below we compare what each costs to install, then run the winter numbers using the U.S. Energy Information Administration’s 2026 national average energy prices.

Two different machines

A furnace makes heat by burning natural gas, propane or oil, or with electric heating elements. It only heats; summer cooling comes from a separate air conditioner.

A heat pump makes no heat of its own. It moves heat, pulling it out of outdoor air in winter and pushing it out of your home in summer. Because moving heat takes less energy than making it, a heat pump can deliver two to three units of heat for every unit of electricity it uses. It also replaces your central air conditioner, which matters a lot when you compare prices.

Upfront cost: compare like with like

System, installed	Typical 2026 cost
Natural gas furnace	$3,800 – $10,000
Propane furnace	$3,700 – $14,200
Electric furnace	$2,000 – $7,000
Ducted air-source heat pump	$6,500 – $12,000 (average about $9,000)
Ductless mini-split heat pump, single zone	$2,000 – $6,000

Furnace figures from Carrier’s replacement guide; heat pump figures from Modernize (see Sources).

On paper the furnace is cheaper. But if your central air conditioner is also near the end of its life, the fair comparison is furnace plus a new AC against one heat pump. A new central AC alone typically adds several thousand dollars, and at that point the heat pump is often the cheaper installation.

Running cost: a worked winter example

Take a home that needs 50 million Btu of heat over a winter, a plausible figure for a mid-sized house in a moderate climate. Here is what that heat costs with each system at the EIA’s 2026 average residential prices: 18.21¢ per kWh of electricity, $16.09 per thousand cubic feet of natural gas, $5.10 a gallon for heating oil, and $2.64 a gallon for propane (the first-quarter 2026 winter price).

Heating system	Energy used	Winter cost
Gas furnace, 95% efficient	≈ 51 thousand cu ft	≈ $816
Heat pump, HSPF2 10	≈ 5,000 kWh	≈ $911
Gas furnace, 80% efficient	≈ 60 thousand cu ft	≈ $969
Heat pump, HSPF2 9	≈ 5,560 kWh	≈ $1,012
Heat pump, HSPF2 7.5 (federal minimum)	≈ 6,670 kWh	≈ $1,214
Propane furnace, 95% efficient	≈ 575 gallons	≈ $1,519
Oil furnace or boiler, 85% efficient	≈ 425 gallons	≈ $2,166
Electric furnace or baseboard	≈ 14,650 kWh	≈ $2,669

HSPF2 is a heat pump’s seasonal heating rating in Btu per watt-hour, measured for a moderate climate. In colder regions real-world efficiency is lower than the label. Our math uses standard energy contents: about 1.04 million Btu per thousand cubic feet of gas, 91,500 Btu per gallon of propane, 138,500 per gallon of heating oil and 3,412 per kWh.

What the numbers say

At national average prices, a high-efficiency gas furnace is the cheapest way to heat in this example, and a good heat pump comes close. Against an older 80% furnace, the better heat pumps are roughly even. Against propane, oil or electric resistance heat, a heat pump wins clearly, by roughly $300 to $1,750 a winter in this example.

Averages hide a lot. Electricity in New England costs far more than in the Pacific Northwest or the Southeast, and gas prices vary just as much. A quick way to check your own case: for a heat pump rated HSPF2 9 to match a 95% gas furnace when gas costs $16.09 per thousand cubic feet, electricity has to cost about 14.7¢ per kWh or less. Pull the per-unit prices off your own bills and compare.

Climate changes the answer

A heat pump’s efficiency falls as the outdoor temperature drops, and standard models lean on backup electric heat strips on the coldest days. That is expensive heat. Cold-climate heat pumps are built to keep delivering useful heat well below freezing. If you live where winters regularly dip into single digits, ask for the unit’s heating capacity at 5°F, not just its HSPF2. In the South, where heating loads are small and air conditioning runs for months, a heat pump is usually the natural choice.

When each one makes sense

A furnace is likely the better buy if

You have natural gas service and gas is cheap relative to electricity where you live.
Your winters are long and very cold.
Your central air conditioner is young and has years of life left.

A heat pump is likely the better buy if

You heat with propane, oil or electric resistance today.
Your air conditioner needs replacing as well.
You have no gas line, or you are adding heating and cooling to a room with no ducts (a mini-split).
Your electricity is inexpensive or you have solar panels.

The middle path: dual fuel

A dual-fuel (hybrid) system pairs a heat pump with a gas furnace. The heat pump handles cooling and most heating. When it gets cold enough that gas becomes the cheaper option, the thermostat switches to the furnace. It costs more to install than either system alone. But in cold places with gas service it captures most of the heat pump’s savings without relying on it on the coldest nights.

Rebates in 2026

The federal tax credit that covered up to $2,000 of a heat pump’s cost (section 25C) does not apply to equipment placed in service after December 31, 2025. Utility rebates and state programs, including income-qualified rebates in some states, are separate and may still be available. Check what your utility offers before you choose; for some households a rebate settles the decision.

Frequently asked questions

Is a heat pump cheaper to run than a gas furnace?

At 2026 national average prices, usually not for heating alone: a high-efficiency gas furnace tends to cost less per winter. A heat pump wins where electricity is cheap relative to gas, and it is far cheaper to run than propane, heating oil or electric resistance heat.

How much does a heat pump cost compared with a furnace?

Published 2026 guides put a ducted air-source heat pump at about $6,500 to $12,000 installed and a natural gas furnace at about $3,800 to $10,000. The heat pump also replaces your central air conditioner, which narrows the gap.

Do heat pumps work in cold climates?

Yes, but efficiency drops as it gets colder, and standard models may need backup heat on the coldest days. Cold-climate models are designed to keep heating well below freezing; ask the installer for the unit's rated capacity at 5°F.

What is a dual-fuel or hybrid system?

A heat pump paired with a gas furnace. The heat pump heats and cools for most of the year, and the furnace takes over when it is cold enough that gas is the cheaper way to heat.

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Sources

Prices are estimates for typical US homes, not quotes; your price depends on your home, region and the products you choose.