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Over-sized air conditioning units will cause a problem bigger than costly energy bills and temperature discrepancies. The bigger problem is moisture. Over-sized air conditioning units will inadequately circulate house air, and leave moisture in the air making it feel cold and clammy.
The beginning of the air conditioning cycle is when its ability to remove moisture, also called latent capacity, is lowest, which is why over- sized units will cause a moisture problem. The short running cycles of over-sized air conditioners will fail to remove excess moisture, leading to wet, dank, as well as humid conditions that mold and mildew relish. In appropriately sized units, the indoor coil temperature is below the air dew-point temperature so moisture will condense on the coils, and be removed though the condensate drain after enough moisture has condensed.
However, in over-sized air conditioners, the coil is unable to operate at the low temperatures and since over-sized units run short cycles, the moisture on the coils does not have time to build up an adequate amount of water before the air conditioner shuts off again. Consequently, the little bit of moisture that did build up on the coils simply evaporates back into the air instead of getting removed through the condensate drain.
Along with the cold and clammy feeling large units can cause, the moisture in the air can cause mold and mildew to grow on walls, in carpets, and even clothes. Mold and mildew, besides looking nasty and smelling awful, can pose health risks particularly for people with immune system deficiencies or breathing problems.