Americans are expected to spend more money heating their homes this winter than on holiday gifts, according to new research. 

The elevated cost of staying warm indoors amid cold outdoor temperatures comes after an unusually hot summer, that led to households spending bigger shares of their budgets on cooling costs, compared with previous years, according to a report from the National Energy Assistance Directors Association (NEADA).

On average, spending on home heating this winter is projected to increase by 8.7% to $941, up from $866 last winter. The increased costs are attributed in part to both expected colder temperatures in the Northeast and Midwest states.

The new average expenditure on heating costs outpaces the $902 the average household is expected to spend on Christmas presents this year, according to a forecast from the National Retail Federation. 

What’s driving up home heating costs?

There are different ways to keep residences warm. Families that use electricity to heat their homes are expected to face the largest increase in costs — more than 14% — which will bring the total up to $1,189 from $1,040 from mid-November through mid-March, which NEADA considers to be the winter period. 

Driving up prices is the rising cost of updating and maintaining the electric grid. Plus, colder weather is expected to lead to increased consumption.

“It’s colder, and the cost of electricity is up as the grid is rebuilt. So we’re seeing both higher prices and greater usage,” NEADA Executive Director Mark Wolfe told CBS MoneyWatch.  

Natural gas, propane and heating oil cost differences

Natural gas and propane users are also expected to be hit with bigger bills this winter. Heating costs for natural gas are up just over 3%, for an average cost of $634 for the winter period, compared with $615 for 2023-2024. Costs are expected to rise only modestly in line with wholesale prices.

Propane costs are up 4.4%, with families expected to spend an average of $1,231 heating homes, up from $1,179 last season. 

Heating oil costs, by contrast, have declined 2.7%, which means average spending this winter will be $1,518, down from $1,560 last winter. 

Early start to the season

November was colder than usual, with temperatures dropping prematurely after a “very expensive summer” of heat waves straining cooling resources, said Wolfe.

Blame climate change for the big swings in temperature, he added.

“Weather conditions can be very unpredictable even though over time, winters are getting warmer and summers are getting hotter. It’s not a straight line, and for consumers, it’s quite upsetting because higher utility bills are coming right before Christmas,” Wolfe said. 

Steps to take now

There are steps consumers can take to help keep a lid on home heating costs. 

Wolfe urges people to have their thermostats serviced now, before the coldest temperatures of the season roll in. That way, families won’t be on the hook for an emergency repair if their thermostat breaks in the middle of a cold front. A tune-up will also help heating systems run more efficiently, he said. 

Always close the furnace flue, or else it will lead heat outside the house, advises Wolfe. Lastly, manually turn down the heat at night, if you can, to save up to 10% on your energy bill.