Why Install a Central Air System? Is It Worth It?

Woman and child hugging in front of air conditioning unit

(Image credit: Getty)

A central air system can be a great addition to your home — keeping your home cool and comfortable in the summer months and you may even add value to your home.

How much it costs to install central air is dependent on a host of factors, including the air conditioning type you invest in, its energy efficiency rating, and the size of your home.

Here’s a rundown on everything you need to know about installing central air, upgrading an old and inefficient air conditioner, installing a new eco-cooling system, and the all-important details on the cost to install central air into your home, helping you decide if it's worth installing central air.

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How much does central air cost to install?

The cost of installing central air depends on a number of factors, including the type of system you opt for, the size of your home, whether any additional work needs to be carried out, and whether you need to bring in professional help.

Typically, however, the cost to install central air conditioning will vary between $5,000 and $12,000, says Adam Graham, construction industry analyst at Fixr with “most homeowners paying $7,000 for a 2,000 square foot home,”

One of the most critical decisions you'll need to make is what kind of central air system is best for you and your home.

What system is best?

Central air systems come in two main types — a split system and a packaged system.

Split systems consist of two main units, one outdoor and another indoor.
Packaged systems have their components in one outside unit.

The cost difference between the two is not insignificant, Fixr’s Graham says, with a split system costing between $2,500 and $7,500, while a packaged system totals between $3,000 and $8,000.

Graham says that the split system is “the most common” and requires less maintenance than a packaged system.

How Important is Energy Efficiency?

A seasonal energy efficiency rating (SEER) is given to air conditioning units based on the “relative amount of energy needed to provide a specific cooling output,” explain the experts at the US Department of Energy’s Energy Saver.

The latest and most efficient systems will have a rating of around 26, so use this as a benchmark when comparing different models.

Higher SEER rating units will increase the cost to install central air but hotter climates may require a unit with one of the higher SEER ratings to keep energy costs down once the unit's been installed.

Don't forget that updates to the energy efficient home improvement credit mean that you can cut your tax bill when you make certain types of energy-efficient home improvements. There's a yearly tax credit of $600 for installing central air systems that meet certain energy-efficiency ratings.

For even bigger savings, consider a heat pump instead of central air conditioning. Although it sounds as if it will be heating your home, a heat pump is an extremely efficient technology for cooling your home. Qualified households can receive rebates up to $8,000 for each heat pump under new federal incentives. Check if you qualify for home energy improvement credits worth $1,000s and find other ways to save big by going green at home.

Other Factors That Determine Costs

Beyond looking at the effectiveness of various models, knowing which type will work best in your house is an important part of ensuring your new system operates well. There are a number of important factors that affect the cost to install central air.

The size of your home is an important factor.
If possible, find out the square footage of your home or have an installer come and see what kind of system would best suit your space.

The size of your home will have an impact on the installation costs associated with central air. "The cost to install a unit for an 800 square foot home can be as little as $2,000, whereas a 3,000 square foot home can run up costs of up to $18,000,” says Graham.
The square footage of a home is also used to calculate the type of unit you'll need. Your installer will calculate how much energy — measured in British thermal units (BTUs) — is needed to cool each room. “The more BTUs required to cool a home, the higher the costs to install central air conditioning” explains Graham.

The type of home you live in

“Installing an AC unit in a mobile home can cost as little as $3,000, whereas installing central air in an apartment can cost up to $150,000,’ says Graham. “The costs related to central air conditioning can vary widely depending on the type of home as ducts may not yet be installed and multiple units may need to be fed by one system.”

The climate

The hotter it is where you live, the larger the unit (and the more BTUs) you'll need and the more your unit will cost. Your home’s insulation and the amount of direct sunlight it receives are also factored into the calculation of energy requirements.

Additional costs to consider

If you’re looking to upgrade an old system, then you may have to pay some additional costs.

“Some companies may charge a fee of up to $200 to remove and dispose of an old AC unit,” says Graham.

Ductwork is an important aspect of your new system working optimally without looking overbearing in your home. If you don’t have existing ductwork in your home, ducts will need to be installed in order to have central air conditioning, which means a higher bill.

Installing "ductwork can cost between $1,800 to $3,300 for both labor and materials,” says Graham.

Will central air add value to your home?

It’s certainly worth having central air installed in your home for two main reasons. Not only does it make your home more comfortable during the summer months, but it can add to the value of your home.

“Central air is very likely to increase home value, particularly for homes located in warmer climates. What's more, central air allows you to live more comfortably through the months of the year when temperatures are high,” says Graham.

And replacing an old system can be worthwhile too.

“The most efficient air conditioners use 30 to 50 percent less energy to produce the same amount of cooling as air conditioners made in the mid-1970s,” according to the US Department of Energy's experts.

“Even if your air conditioner is only 10 years old, you may save 20 to 40 percent of your cooling energy costs by replacing it with a newer, more efficient model,” they add.

Can you install your own central air unit?

“Installing a central air unit is not a suitable DIY project as it requires a licensed professional to be installed adequately,” says Adam.

Regardless of which contractor you choose to bring in, make sure they follow the US Department of Energy’s Energy Saver recommendations to ensure the system is installed correctly and safely and that it works at its optimum.

Tom is a journalist and writer with an interest in sustainability, economic policy and pensions, looking into how personal finances can be used to make a positive impact. He graduated from Goldsmiths, University of London, with a BA in journalism before moving to a financial content agency. His work has appeared in titles Investment Week and Money Marketing, as well as social media copy for Reuters and Bloomberg in addition to corporate content for financial giants including Mercer, State Street Global Advisors and the PLSA. He has also written for the Financial Times Group.

When not working out of the Future’s Cardiff office, Tom can be found exploring the hills and coasts of South Wales but is sometimes east of the border supporting Bristol Rovers.