North American lumber prices have lost almost USD 100 per thousand board feet since their July peak, and conditions remain unfavourable for a sustained recovery during the final months of 2026. US single-family construction has weakened, new-home inventories are high and mortgage rates remain restrictive, while buyers have little incentive to rebuild lumber stocks ahead of the seasonally slower winter period. Supply, however, is moving in the opposite direction: US sawmill capacity has contracted, British Columbia continues to lose production and Canadian shipments to the United States are falling. Global Wood Markets Info (GWMI) expects lumber to trade mainly between USD 535 and USD 575\/mbf during Q4 2026, before a smaller North American production base and a potential improvement in US housing create firmer conditions during 2027.<\/p>\n
North American lumber prices were trading at around USD 565.54 per thousand board feet at the end of August, down roughly 14% from the July high near USD 660\/mbf. The correction has erased most of the summer rally and returned the market close to its lowest level in five months. Prices had moved rapidly higher between June and July as buyers anticipated tighter Canadian supply, further mill closures and additional trade costs, but deteriorating US construction data subsequently removed much of that premium. There has been no comparable improvement in physical supply: North American sawmill capacity has not expanded, Canadian production remains under pressure and trade conditions between Canada and the United States have become more restrictive.<\/p>\n
The price decline has instead been driven by weaker consumption and a change in inventory behaviour. US residential construction slowed sharply in July, new-home sales declined and inventories increased while mortgage rates moved back toward their 2026 highs. Builders have little reason to accelerate construction when completed and partially completed homes are already accumulating, and lumber distributors can keep inventories relatively lean while their customers are purchasing cautiously. This should remain the dominant influence during the final four months of 2026, particularly as the construction season moves toward winter.<\/p>\n
The summer lumber rally has been largely reversed<\/strong><\/p>\n Lumber entered June below USD 590\/mbf before climbing above USD 630 during July and briefly approaching USD 660. Supply concerns contributed heavily to the move: Canadian producers were already dealing with reduced output, British Columbia had lost additional capacity and the prospect of higher trade costs encouraged some buyers to secure material earlier than usual. By late August, however, approximately USD 95\/mbf had disappeared from the July peak as the housing outlook weakened and purchasing activity slowed.<\/p>\n At around USD 565\/mbf, current prices are more consistent with subdued construction demand than with a major surplus of lumber. Production has not increased sufficiently to explain a 14% price correction, while several indicators point toward less rather than more available capacity. The adjustment has come primarily through the demand side, with buyers unwilling to maintain the prices reached during July once housing data deteriorated. Unless construction indicators improve quickly in September and October, there is limited justification for lumber returning immediately toward USD 600\u2013650\/mbf.<\/p>\n Further downside is possible, although the economics of production should increasingly limit the decline. Prices around USD 535\u2013550 would put additional pressure on higher-cost mills and could trigger further curtailments, particularly in western Canada. A move toward USD 500 would probably require a more pronounced deterioration in US housing or a broader economic slowdown rather than simply the continuation of current market conditions.<\/p>\n US housing is the main constraint on lumber demand<\/strong><\/p>\n US housing starts fell 12.4% in July to a seasonally adjusted annual rate of 1.239 million units, while starts were 13.5% below July 2025. The decline was particularly severe in the segment that matters most for structural lumber: single-family starts dropped 9.9% to an annualised 808,000 units, leaving activity substantially below the levels required to generate a strong increase in lumber consumption.<\/p>\n Detached homes consume considerably more framing lumber per dwelling than multifamily buildings, which makes the single-family figure more relevant to sawmills than the headline construction number alone. If starts remain around 800,000\u2013850,000 annualised through the autumn, wholesalers are unlikely to rebuild inventories aggressively and mills will continue competing for a limited volume of orders. Housing completions also weakened in July, with total completions falling 9.1% from June and single-family completions declining 5.8% to an annualised 878,000 units.<\/p>\n New-home sales added further pressure, falling 10.5% in July to an annualised 607,000 units. Around 488,000 new homes were available for sale, equivalent to 9.6 months of supply at the July sales pace. Builders therefore enter the autumn with weaker sales and a large inventory of homes already on the market, reducing the incentive to launch new projects. Before construction can provide substantially stronger lumber demand, part of this inventory will probably have to be absorbed.<\/p>\n Mortgage rates leave little room for a rapid autumn recovery<\/strong><\/p>\n The average US 30-year fixed mortgage rate stood at 6.66% in late August, close to the highest level recorded during 2026. At current house prices, financing costs at this level continue to restrict affordability, while millions of existing homeowners remain reluctant to sell properties financed several years ago at much lower mortgage rates. The resulting reduction in housing turnover affects new construction as builders compete with the existing-home market for a smaller pool of buyers.<\/p>\n For lumber demand, the effect runs directly through construction schedules. Slower sales encourage builders to offer incentives, delay new projects and work through existing inventory before increasing starts. This makes a strong Q4 rebound in lumber consumption unlikely unless mortgage rates fall considerably during the autumn, something that cannot be assumed in the base case.<\/p>\n Single-family building permits offer a somewhat better signal for 2027. They increased 2.5% in July to an annualised 894,000 units, while total permits rose 5% to 1.443 million. Permits remain noticeably above actual single-family starts, leaving a backlog of authorised construction that could move into the building phase if borrowing conditions improve. The gap between permits and starts is one reason the 2027 demand outlook looks better than the final months of 2026 without requiring an exceptionally strong housing recovery.<\/p>\n North American capacity is shrinking<\/strong><\/p>\n US sawmill production declined again during the first quarter of 2026, marking a second consecutive quarterly contraction, while estimated production capacity fell 6% year-on-year. Capacity utilisation nevertheless increased slightly because the remaining industry was operating against a smaller installed base. The numbers point to continued rationalisation rather than an industry preparing to increase output substantially in response to the next improvement in demand.<\/p>\n Permanent and indefinite closures have already removed several billion board feet of North American capacity since 2024, with further reductions expected during 2026. British Columbia remains the centre of the contraction, where declining timber availability, high log costs and heavy exposure to US trade measures have forced repeated closures and curtailments. More than 20 sawmills have closed in the province since 2023, while surviving operations continue to adjust production according to market conditions.<\/p>\n These reductions are unlikely to prevent lumber prices from falling during a weak housing market, but they should increasingly limit the depth and duration of the downturn. A mill that closes permanently during Q4 does not return automatically when housing starts improve six months later, and restarting curtailed production also requires sufficiently attractive margins. The longer lumber remains near the lower end of the expected range, the greater the probability that additional capacity will disappear before demand recovers.<\/p>\n Canadian shipments are already contracting<\/strong><\/p>\n Canadian softwood lumber exports declined to around 13.2 million m\u00b3 during the first half of 2026, down 12% from the previous year, while shipments to the United States fell approximately 13% to 11.8 million m\u00b3. The US nevertheless continued to absorb around 89% of Canadian softwood lumber exports, leaving producers with few markets capable of replacing lost American volume on a comparable scale.<\/p>\n Canadian suppliers have increased shipments to several alternative destinations, including China, Taiwan, Mexico, Pakistan, South Korea and Hong Kong, but the additional volume has compensated for only a small portion of the decline in US trade. Geography, transport infrastructure and the sheer size of American construction demand mean that diversification can reduce Canadian dependence on the US only gradually.<\/p>\n July shipments also show how important Canadian lumber remains to American supply. Canada exported approximately 846 million board feet of softwood lumber to the US during the month, with British Columbia, Alberta, Quebec and the Maritime provinces accounting for most of the volume. Replacing Canadian supply through additional US production would require substantial new capacity at a time when the American industry itself is contracting.<\/p>\n Trade costs increase pressure on Canadian mills<\/strong><\/p>\n Canadian softwood lumber continues to face high US anti-dumping and countervailing duties, with combined rates currently reaching 47.59% for Canfor, 26.47% for West Fraser and 35.16% for many other producers covered by the current review cycle. A separate 10% Section 232 tariff applies to certain Canadian softwood lumber products, adding to a cost structure already burdened by freight, labour and, particularly in British Columbia, expensive fibre.<\/p>\n The consequences become more severe when lumber prices decline. A benchmark price near USD 565\/mbf produces considerably less room to absorb duties and operating costs than the USD 650-plus market seen during July. Canadian mills therefore face the possibility of declining selling prices without a corresponding reduction in their largest expenses, increasing the probability of additional production cuts if prices move toward the lower end of GWMI's Q4 range.<\/p>\n The wider US-Canada trade confrontation adds uncertainty beyond the direct cost of tariffs. Buyers are less willing to carry large inventories when future landed costs are difficult to predict, while producers have less incentive to commit capital to additional capacity when access to the largest regional market is subject to changing trade measures. This should keep inventory management conservative on both sides of the border through the remainder of the year.<\/p>\n <\/p>\n <\/p>\n <\/p>\n The US South cannot replace lost Canadian capacity immediately<\/strong><\/p>\n The US South remains the main source of potential production growth. Softwood lumber capacity in the region expanded strongly between 2017 and 2025 as Canadian and US producers invested in new mills close to abundant southern pine resources, shifting part of the industry's centre of gravity away from British Columbia and the Pacific Northwest.<\/p>\n The pace of expansion is now slowing. Lumber margins have weakened, financing and construction costs remain elevated and residual markets have deteriorated in several southern states as pulp and paper capacity has closed. Sawmills depend on outlets for chips, sawdust, bark and other residual products as part of their overall economics, so weak demand for these materials reduces the profitability of converting logs into lumber even when standing timber itself is relatively inexpensive.<\/p>\n Additional southern capacity will continue to enter the market, but another investment wave on the scale seen during the previous decade looks increasingly unlikely under current conditions. The South can replace part of the Canadian production being lost, but doing so requires capital, permitting, construction and labour, making it a multi-year process rather than an immediate response to a tighter lumber market.<\/p>\n GWMI Q4 2026 forecast: USD 535\u2013575\/mbf<\/strong><\/p>\n GWMI expects lumber to trade predominantly between USD 535 and USD 575\/mbf during Q4 2026, with the centre of the range around USD 550\u2013560. This represents a modest further weakening from the late-August level rather than another correction comparable with the USD 95 decline recorded since July.<\/p>\n The main reason for keeping the base case relatively narrow is that the forces currently pushing prices lower are already well established. Housing starts are weak, mortgage rates are high and buyers have reduced inventories. A substantial part of that deterioration has therefore already been incorporated into lumber prices. Moving sustainably below USD 535 would probably require another deterioration in demand rather than merely continuation of existing conditions.<\/p>\n The downside scenario is USD 500\u2013525\/mbf. Such prices become plausible if single-family starts fall materially below an 800,000 annualised pace, mortgage rates approach or exceed 7%, or the US economy weakens sufficiently to cause builders to reduce construction plans further. Prices around USD 500 would place substantial pressure on marginal production and would probably result in additional curtailments, limiting how long the market could remain there without a deeper recession.<\/p>\n An upside move toward USD 590\u2013620\/mbf during Q4 would require a different catalyst, most likely a significant round of mill curtailments, a rapid decline in mortgage rates or buyers returning to the market simultaneously after running inventories too low. Such a move is possible given the volatility of lumber futures, but it is not GWMI's central expectation for the final months of 2026.<\/p>\n 2027 should begin from a tighter supply position<\/strong><\/p>\n The 2027 outlook does not require a construction boom. A moderate improvement in US housing would be enough to increase lumber consumption from the depressed levels expected during the second half of 2026, while the production base available to meet that demand will probably be smaller. US capacity has already contracted, Canadian output continues to decline and further closures during a weak Q4 would reduce available supply before the spring construction season begins.<\/p>\n Single-family permits running above starts provide a potential source of demand if financing conditions improve. A gradual decline in mortgage rates could allow part of the existing project pipeline to move into construction, while lower borrowing costs would also help reduce the large inventory of unsold new homes. Even a return of single-family starts toward 900,000\u20131 million annualised units would represent a meaningful increase in lumber consumption compared with July's 808,000 pace.<\/p>\n GWMI therefore expects the stronger portions of 2027 to produce prices mainly between USD 590 and USD 650\/mbf. The forecast assumes a moderate housing recovery rather than a return to pandemic-era conditions and allows for continued competition among mills during the early part of the year. The upper half of the range becomes more likely once construction demand begins to improve seasonally and buyers start rebuilding inventories.<\/p>\n USD 700 remains an upside scenario, not the base case<\/strong><\/p>\n A return above USD 700\/mbf is possible during 2027, but it would require several supportive factors to occur together. Mortgage rates would need to decline sufficiently to produce a clear recovery in single-family construction, additional North American sawmill capacity would need to disappear during late 2026 and buyers would need to rebuild inventories faster than mills could increase production.<\/p>\n Under those conditions, prices could move into a USD 680\u2013725+ range for periods during 2027. The trigger would not necessarily be exceptionally strong lumber consumption; a relatively normal increase in construction could produce a large price response if the available supply base has already been reduced sufficiently.<\/p>\n A repeat of the pandemic lumber boom remains highly unlikely. The USD 1,000\u20131,500 prices reached during that period resulted from an exceptional combination of construction and renovation demand, logistics disruption, mill constraints and aggressive inventory accumulation. The 2027 bullish case is much less extreme and rests primarily on the reduction of production capacity during several consecutive weak years.<\/p>\n The downside case for 2027<\/strong><\/p>\n A weaker scenario remains possible if US housing fails to recover. Mortgage rates remaining around 6.5\u20137%, persistent new-home inventories and slower economic growth could keep single-family construction near current levels well into 2027, leaving lumber predominantly around USD 500\u2013560\/mbf rather than moving toward the base-case range.<\/p>\n Such an outcome would be particularly difficult for Canadian producers and higher-cost US mills. Additional closures would become likely, especially if duties remain elevated and fibre costs do not adjust sufficiently. The market could consequently remain weak for longer, but North American production capacity would also contract further, leaving fewer mills available for the eventual recovery.<\/p>\n The principal uncertainty for 2027 is therefore the timing of the housing improvement rather than the existence of supply constraints. If construction remains weak, those constraints can remain hidden because the market simply does not require enough lumber to expose them. Once consumption begins increasing, reduced capacity should become much more visible.<\/p>","protected":false},"excerpt":{"rendered":" North American lumber prices have lost almost USD 100 per thousand board feet since their July peak, and conditions remain unfavourable for a sustained recovery during the final months of 2026. US single-family construction has weakened, new-home inventories are high … Continue reading \n\n
\n \nIndicator<\/th>\n Latest<\/th>\n Context<\/th>\n Market relevance<\/th>\n<\/tr>\n<\/thead>\n \n US housing starts<\/td>\n 1.239 million<\/td>\n \u221212.4% m\/m<\/td>\n Construction activity weakened sharply in July<\/td>\n<\/tr>\n \n Single-family permits<\/td>\n 894,000<\/td>\n +2.5% m\/m<\/td>\n Early indication of possible improvement ahead<\/td>\n<\/tr>\n \n New homes for sale<\/td>\n 488,000<\/td>\n 9.6 months of supply<\/td>\n High inventory limits the need for new construction<\/td>\n<\/tr>\n \n 30-year mortgage rate<\/td>\n 6.66%<\/td>\n Late August<\/td>\n Affordability remains a major constraint<\/td>\n<\/tr>\n \n US sawmill utilization<\/td>\n 71.8%<\/td>\n Q1 2026<\/td>\n Utilization edged higher despite weaker production<\/td>\n<\/tr>\n \n US Section 232 tariff<\/td>\n 10%<\/td>\n Certain Canadian softwood lumber<\/td>\n Adds to the cost of Canadian shipments to the US<\/td>\n<\/tr>\n \n Canfor AD + CVD<\/td>\n 47.59%<\/td>\n Current combined rate<\/td>\n Severe margin pressure on US-bound production<\/td>\n<\/tr>\n \n West Fraser AD + CVD<\/td>\n 26.47%<\/td>\n Current combined rate<\/td>\n Raises the delivered cost of Canadian lumber<\/td>\n<\/tr>\n \n \u201cAll Others\u201d AD + CVD<\/td>\n 35.16%<\/td>\n Current combined rate<\/td>\n Trade costs remain a major supply-side constraint<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
\n-9.9%<\/strong><\/div>\n
\n-10.5%<\/strong><\/div>\n
\n-6.0%<\/strong><\/div>\n
\n-12.0%<\/strong><\/div>\n
\n-13.0%<\/strong><\/div>\n
\n$660<\/strong><\/div>\n
\n$565.54<\/strong><\/div>\n
\n$535\u2013575<\/strong><\/div>\n
\n$590\u2013650<\/strong><\/div>\n