Furnace Replacement Cost: 2026 Pricing

Total Cost Range & Breakdown

You're looking at $4,800 on the low end for a basic 80% AFUE unit in a straightforward replacement, and $9,200 at the high end for a high-efficiency condensing furnace with ductwork modifications. Most homeowners in Minneapolis fall somewhere between $6,500 and $7,800.

Here's where that money goes:

The unit itself is the variable. A mid-range 95% AFUE furnace (think Lennox, Carrier, or Goodman) costs $2,400–$3,200 wholesale, which contractors then markup 30–40% to cover overhead and profit. That's not dishonest — it's the business. But it's where you see the biggest price swings between contractors.

Labor Costs: What You're Paying For

Minneapolis HVAC labor runs $100–$150 per hour, and a furnace replacement typically takes 6–8 hours if the old unit pulls out cleanly and ductwork is in decent shape. That math gets you to $2,100–$4,200 in pure labor.

But here's what I see cost extra: old homes with cast-iron ductwork (common in Northeast Minneapolis), asbestos wrapping around the original ducts, or a furnace wedged into a crawlspace smaller than a phone booth. Every one of those adds 2–3 hours. A contractor who gives you the same price for a straight swap as for a 1950s bungalow with buried return air is either lowballing to win the bid or doesn't know what he's looking at yet.

Breakdown of labor typically looks like:

• Unit removal and disconnection: 1–1.5 hours
• Gas line & electrical hookup: 1.5–2 hours
• Ductwork sealing/reconnection: 1–2 hours
• Thermostat integration and startup: 1–1.5 hours
• Cleanup and old-unit hauling: 0.5–1 hour

Reputable shops charge a flat rate for straightforward jobs ($2,200–$2,800) and hourly once surprises show up. Cheap shops quote the flat rate and bill you for every extra hour they "didn't anticipate" — that's the trap.

• Unit removal and disconnection: 1–1.5 hours
• Gas line & electrical hookup: 1.5–2 hours
• Ductwork sealing/reconnection: 1–2 hours
• Thermostat integration and startup: 1–1.5 hours
• Cleanup and old-unit hauling: 0.5–1 hour

Furnace Unit Pricing: AFUE Ratings Matter

The furnace itself is where manufacturers and contractors hide pricing power. The same physical work costs the same; the unit cost is pure product.

80% AFUE (older, less efficient): $1,800–$2,400. These are honestly fine if your house runs mild winters and you're not planning to stay another 20 years. You'll burn more gas, and you'll notice it every January, but the unit works.

92–95% AFUE (standard high-efficiency): $2,400–$3,200. This is the sweet spot. You'll see your gas bill drop 15–20% compared to an 80% unit, and the payback happens in 7–9 years. Lennox XC21, Carrier 25HNH, and Goodman GMS series all run around here.

98% AFUE (condensing furnace, premium): $3,600–$4,500. You need a proper condensate drain and venting to handle the extra moisture, which costs another $300–$600 to install. These are for homeowners committed to the long haul and willing to pay $400–$600 a year less in fuel.

I've seen the BLS report appliance costs up 287.4 in February 2026 — that's a signal that furnace pricing rose with overall inflation, but supply-chain issues that plagued 2022–2024 have cleared up. Inventory is normal now, which means less "availability markup" and better pricing if you compare quotes.

Permits & Inspection: Don't Skip This

Minneapolis requires a mechanical permit for any furnace replacement. Cost: $150–$300 depending on whether it's a straight swap or involves ductwork or venting changes. A final inspection is mandatory before you sign off.

Some contractors will tell you they can "do this under the radar" without a permit and pocket the fee themselves. Don't do this. If your house burns down or sells, and the inspector finds an unpermitted furnace, the liability is yours. I watched a client get dinged $2,800 on a sale inspection for an unpermitted unit installed 8 years prior by a contractor who's probably out of business now.

Legitimate shops build permit costs into the quote. Sketchy ones bury it or omit it and surprise you at the end. Ask directly: "Is the permit fee included, and what does the inspection cover?"

Regional Price Variation: Minneapolis vs. National Averages

Minneapolis sits in the Midwest, where HVAC labor and material costs run lower than the Northeast and higher than the South.

Minneapolis specifically benefits from healthy competition — there are 40+ licensed HVAC shops in the metro area, which keeps labor rates competitive. Northeast markets have fewer shops and longer heating seasons, so pricing reflects that scarcity. Southern cities run cooler (so furnaces are smaller and simpler) and have thinner margins because heating demand is shorter.

If you're comparing quotes from chains like Lennox, Carrier, or Trane, expect them to run 10–15% higher than independent shops because of overhead and franchise fees. That overhead sometimes buys you better service guarantees, but not always.

Material Costs: What's in the Quote

Beyond the furnace unit itself, material costs include fittings, sealant, thermostat wiring, and disposal. Here's what you should see:

• Gas line fittings & shut-off valve: $80–$150
• Ductwork tape, mastic sealant, hangers: $120–$200
• Thermostat wiring (if new): $50–$100
• Condensate drain line (if upgrading to high-efficiency): $40–$80
• Removal/recycling of old unit: $200–$400 (labor-heavy)

Reputable contractors line-item these. The ones who lump it all into "materials — $600" are hiding something, or they're cutting corners on sealant and connections. I've come back to jobs 18 months later where a cheaper competitor's ductwork was barely sealed — utility bills spiked 8–10% because conditioned air leaked into the attic.

Also: ask if they use UL-rated aluminum mastic on ductwork seams. It's $5–$10 more per job, but it lasts. Duct tape (the actual product) dries out in 5 years and fails. Cheap shops use it anyway because nobody sees it.

• Gas line fittings & shut-off valve: $80–$150
• Ductwork tape, mastic sealant, hangers: $120–$200
• Thermostat wiring (if new): $50–$100
• Condensate drain line (if upgrading to high-efficiency): $40–$80
• Removal/recycling of old unit: $200–$400 (labor-heavy)

Red Flags: Common Scams & Padding

Bait-and-switch on efficiency: A contractor quotes you a 95% AFUE unit at $6,200 all-in, you sign, and the unit that shows up is an 80% model. They pocket the $1,000+ difference. Always get the furnace model number in writing, with the AFUE rating and warranty.

Hidden ductwork charges: A quote says "$6,800 complete installation." Then after the old unit is out, they discover "the return air duct needs sealing" (it always does, but that's normal wear) and bill you $1,200 extra. Get a pre-job walkthrough where the contractor identifies any ductwork issues upfront. If they don't, ask for a credit when they find them.

Inflated disposal fees: Charging $400–$600 to haul away a furnace that weighs 150 pounds and takes 30 minutes. Real haul-off: $150–$250. Over-quoting this line item is easy because homeowners don't know the going rate.

The "blowout" special: Shops running sales at 20–30% below the market rate. Every time I've seen this, the crew is green (high training cost later), materials are compromised (they buy cheaper sealant or wire), or the quote omits something — permit, haul-off, a thermostat wire upgrade. Get competing quotes from 3–4 shops. If one is 25% cheaper, there's a reason.

Warranty bundling scams: "Extended 10-year warranty — only $800 more!" Check the manufacturer's base warranty first. Lennox and Carrier both offer 10–year compressor coverage on qualifying units if you register them. The contractor is selling you what you already have.

Every time I've seen a homeowner get roasted on a furnace job, it was because they went with the lowest bid without asking detailed questions or reading the fine print.

Efficiency Payback: When High-Efficiency Makes Sense

A 95% AFUE furnace costs $800–$1,200 more than an 80% unit. If your heating bill is $1,200 a year, upgrading saves you roughly $180–$240 annually. Payback is 5–7 years.

But if you're selling the house in 3 years, you won't recoup the difference. A buyer might not pay more for a newer furnace — they care about the overall house, not the furnace's age. Conversely, if you're staying 15+ years and heating costs matter, high-efficiency is solid math.

98% condensing furnaces are fringe unless you're in a zero-energy-build mindset or your gas bill is $2,000+. The payback stretches to 10–12 years, and they require professional service every 2–3 years to clean the condensate trap. One ignored maintenance call and you're looking at a $400 repair that could've been $0.