Direct Heating Equipment (DHE) is a category of ductless space heating appliances that provide warm air directly to the space where they are installed. We investigate, from the perspective of the DHE supply chain in California, what types of DHE are marketed in the state, how they are sold and serviced, and whether any potential barriers to adoption of high-efficiency DHE exist. We find that the market for DHE in the state is almost exclusively a replacement market, with some additional repair and maintenance services. We also find that, even though manufacturers sell high-efficiency DHE models in California, most contractors report installing baseline models most of the time. Contractors say their customers do not see any value in high-efficiency units, and they (contractors) do not believe that high-efficiency DHE is worth the additional cost to their customers. In addition, the majority of contractors purchase DHE from distributors and, therefore, distributors are a key piece of the supply chain that can constrain DHE purchase choice. Distributors do not see a demand for high-efficiency DHE and, hence, do not keep stock of these units. They argue that, since the market is driven mostly by replacements and these replacements occur typically in an unplanned way, homeowners are unwilling to pay for any additional costs associated with a high-efficiency model. Rather, homeowners usually prefer to replace the failed unit with a new unit that can fit in the same location with no- or minimal additional replacement costs. Considering that most DHE purchases are made by contractors, on behalf of their customers, informing contractors (and homeowners) of the potential cost-effectiveness of efficient DHE could help mitigate some of the barriers to the adoption of high-efficiency DHE in the state. In addition, monetary incentives and more stringent building codes that apply to DHE replacements can contribute to increasing adoption of high-efficiency DHE in California. This will not only reduce energy costs, but also increase safety and comfort to DHE users.