As dealers, suppliers, and members of the hearth industry converge on Reno, Nev., for the annual Hearth, Patio, & Barbecue Expo, the mood here is decidedly mixed. Though attendees will get a chance to see a wealth of innovative, energy-saving new products with a high wow factor, product manufacturers—like everyone associated with the real estate market—remain on edge as the housing slump has affected their shipments.

Nearly 1.9 million hearth products were shipped in 2008, the industry reported March 19—down substantially from the 2.37 million that shipped in 2007. Manufacturers at the various booths tried to put a good face on the bad news, avoiding any direct responses about the declining shipments. But they say innovation is still occurring and that a fireplace purchase is still a good idea for those home buyers who want a good supplemental source of heat and want to save money.

"Today's manufacturers are designing fireplaces, stoves, and other heating products with efficiency and environmental impact in mind," says Jack Goldman, president of the Hearth Patio & Barbecue Association in Arlington, Va. "There are more options than ever to supply homes with warmth and ambiance that not only help cut heating costs, but also provide consumers with renewable fuel options. This year's HPBExpo features the latest products for the hearth of the home."

Perhaps the lone bright spot for the hearth industry—and one they are more than willing to discuss—is the sharp increase in pellet-burning appliances and in wood inserts. According to the association, the industry saw a 161 percent increase in shipments of pellet stoves and inserts in 2008. Wood inserts shipments, meanwhile, jumped 84 percent.

Late last year the industry released a consumer survey indicating that more people, reacting to the spike in oil prices, were turning to efficient EPA-approved wood stoves, fireplace inserts, and pellet stoves and inserts to heat their homes. Shipments of pellet stoves and inserts for the first six months of 2008 increased by 212 percent as compared to the same period in 2007, while wood stoves and inserts increased 54 percent for the same period. The numbers eventually leveled off once oil prices plummeted, but still remained strong for the year.

EPA-approved freestanding wood stoves are inherently more efficient, because they perform a slow, controlled burn that generates substantially less smoke than a traditional wood fireplace. These units are also excellent heat sources, able to warm a house as large as 2,000 square feet, depending on the size of the unit and the tightness of the home's building envelope. A pellet stove or insert accomplishes the same feat using a renewable, clean-burning fuel made from sawdust or other wood waste.

These types of products, the industry says, are exactly what consumers are looking for. According to the HPBA survey, about 70 percent of buyers upgraded their fireplaces for energy efficiency; 51 percent did so to help save on heating costs.

Manufacturers are hoping that this trend toward energy efficiency might help buoy the industry through these difficult economic conditions. In particular, the industry will be keeping an eye on the effects of the recently passed stimulus package, which makes stoves and inserts more affordable by providing consumers with a 30 percent tax credit (up to $1,500) through 2010 for the addition of a 75 percent efficient biomass-burning stove.

A few kinks need to be ironed out before homeowners can take advantage of the credit, however. "While the new tax credit takes effect immediately, the Internal Revenue Service (IRS) has not issued the guidelines for determining what stoves meet the efficiency requirements to qualify for the credit or how a manufacturer will qualify their products," HPBA noted in a March 18 statement. "These guidelines are expected by April 30, 2009, [but] the credit [will apply] to all qualifying stoves sold in 2009. Once the IRS guidelines are issued, wood and pellet stove manufacturers will test their stoves and will notify their retailers about their models that qualify."