When it comes to heating your home, the two most common options are natural gas furnaces and electric heating systems. While both provide warmth, the monthly costs can vary dramatically depending on energy prices, climate, and system type. Here’s a breakdown to help you understand which is right for your home and budget.
Electric Heat vs. Gas Heat
- Average Annual Cost: ~$540–$600
- Estimated Monthly Cost: ~$45–$50
Natural gas is generally the cheaper option for home heating. High-efficiency furnaces (with AFUE ratings up to 99%) can stretch every dollar further. For homes in colder regions, gas heating remains the most cost-effective solution. However, the upfront installation—especially if you don’t already have gas lines—can be higher than electric systems.
Electric Heating Costs
- Average Annual Cost (Traditional Resistance): ~$838
- Estimated Monthly Cost: ~$70 (but can range from <$25 to >$200 depending on usage and climate)
Electric resistance heating is near 100% efficient at the point of use, but because electricity rates are typically higher than natural gas, monthly bills can skyrocket—especially in colder climates. Still, electric systems often have lower installation costs and are easier to maintain.
Heat Pumps: The Electric Advantage
- Efficiency: ~50% less electricity than traditional electric heating
- Estimated Monthly Cost: ~$35 (in moderate climates)
Heat pumps are changing the electric heating landscape. By transferring heat instead of generating it, they deliver up to 3 times more heating energy than the electricity they consume. In mild or moderate climates, this makes them not only competitive with gas heating but sometimes cheaper over the long run. Geothermal heat pumps can provide even greater efficiency, though installation costs are higher.
Cost Comparison Table
| Heating Type | Annual Cost | Monthly Cost (Est.) | Notes |
|---|---|---|---|
| Natural Gas Furnace | ~$540–$600 | ~$45–$50 | Most affordable in cold climates |
| Electric Resistance Heating | ~$838 (avg) | ~$70 | Can spike in colder regions |
| Electric Heat Pump | ~50% less than electric | ~$35 (est.) | Best in moderate climates |
| Geothermal Heat Pump | Varies | Lower long-term | High upfront cost, very efficient |
Other Factors That Impact Cost
- Climate: Electric resistance heating gets very expensive in northern states, while gas prices rise less dramatically. Heat pumps thrive in milder regions.
- Fuel Price Fluctuations: Electricity prices are generally more stable than natural gas, which can swing based on market conditions.
- Installation & Maintenance: Gas systems often cost more upfront but less to run, while electric systems are easier and cheaper to install.
- Energy Incentives: Many states offer rebates for heat pumps and energy-efficient systems, reducing long-term costs.
Tips to Reduce Heating Bills
- Insulation & Weatherproofing: Proper insulation can cut heating bills by up to 45%.
- Smart Thermostats: Lowering the temperature by just a few degrees can save up to 10% annually.
- Energy Audits: Consider a home energy audit to find leaks and inefficiencies.
Conclusion
For most U.S. households, natural gas heating remains the cheapest monthly option. Traditional electric resistance heating is significantly more expensive, but electric heat pumps are a strong competitor—especially in milder climates and when factoring in incentives. If you’re considering a new system, weigh both upfront installation costs and monthly operating expenses to make the best decision for your home and budget.
