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After a volatile period in pricing, including extreme highs from 2020 to 2022, lumber prices have largely stabilized during the past year to a range above pre-pandemic levels. According to price guide newsletter Madison’s Lumber Reporter, in 2019, the average price of benchmark softwood lumber Western Spruce-Pine-Fir was approximately $365 per thousand board feet; to date, the average in 2024 has been $445 per thousand board feet. Prices did drop in the middle of April, marking a departure from normal seasonal cycle trends.

“Producers especially had done what they could to keep prices up, specifically by keeping manufacturing volumes lower in the face of this ongoing soft demand. However, secondary suppliers were undercutting the sawmills by lowering prices to entice customers in their direction,” Keta Kosman, publisher of Madison’s Lumber Reporter, told BUILDER. “For their part, lumber buyers continued with the practice established in mid-2023 of booking orders only for existing projects.”

Kosman says despite warnings not to let inventories run too lean, lumber users have felt “a sense of confidence” due to ongoing lower prices and “have been willing to take their chances on getting caught short of wood this summer.”

NAHB Warns on Lumber Prices

NAHB chief economist Rob Dietz says lumber has been a topic the organization has continued to warn builders of in discussions across the country.

“If we compare the current prices, obviously [lumber prices are] in a much better position than the $1,500 [per thousand board feet] price level that we saw in the first half of 2021,” Dietz says. “But keep in mind that lumber prices were about $350 per thousand board feet before COVID hit, so we’re up a little bit. The warning I have been giving builders is that we have not fixed the fundamental frictions in the lumber market.”

According to Madison’s Lumber Reporter, U.S. lumber production is recovering from lows in early 2023, but Canadian production volumes are still down relative to 2023. In 2023, U.S. sawmills produced 37,371 million board feet, down 1.2% from 2022; Canadian sawmill production declined 6% year over year to 20,145 million board feet.

“At any given time, approximately 33% of all wood in the United States comes from Canada, so that supply is quite important for U.S. lumber customers. One reason for the different direction in manufacturing between the countries is that a significant portion of timber in the U.S. South reached maturity in recent years and had to be harvested,” Kosman says. “Meanwhile, in Canada, the timber supply in the important basket of British Columbia has been dropping. Close to 40% of all wood manufactured in Canada comes from British Columbia, so that ratio is critical within the total U.S. import of wood products.”

Canadian Lumber Exports Down

As such, Canadian lumber exports to the United States through November 2023 were 7.9% lower than the same time in 2022. Lumber exports from British Columbia to the United States in the same period were 19% lower than a year earlier.

“From a policy perspective, we need to find ways to increase the potential volume of domestic softwood lumber, and we need a new Softwood Lumber Agreement with Canada,” Dietz says. “This round of the dispute has been going on for more than seven years. The tariff rates could go up this year, and, in an environment where single-family home building volume is expected to increase, that does mean some additional constraints on lumber availability and likely some volatility in terms of lumber pricing.”

Kosman says in British Columbia, as well as the U.S. Pacific Northwest, sawmills are having difficulty accessing fiber and are facing rising costs. British Columbia’s timber harvest has plummeted from 65 million cubic meters in mid-2016 to a projected 30 million cubic meters for 2024, the combined result of Mountain Pine Beetle infestations in the 1990s and 2000s and more recent wildfires.

According to data from the Western Wood Products Association, U.S. sawmills ran at 80% capacity in 2023, down compared with 2022 and pre-pandemic levels; Canadian sawmills ran at 69% capacity in 2023, down significantly from pre-pandemic levels of 80% in 2019. Kosman says in the highly optimized sawmills in British Columbia, 90% or higher capacity would be considered “normal,” indicating there is “an immense amount of lumber volume” available to come back online.

“At this point, there is little to no reason for Canadian or U.S. sawmills to expect a sizable increase in lumber demand any time soon, which means prices would stay around the levels they are now,” Kosman says.

Weather Makes Lumber Prices Hard to Predict

Kosman says weather conditions, including harsh winters, extended periods of bad weather in the spring, severe storm activity in the United States, and wildfires in April, make it “impossible to forecast what might happen [to lumber prices] as actual home building gets going this summer.”

“Builders are having the most difficulty finding lots for new projects, which is causing problems for startup of new-home building. Meanwhile the entire housing construction industry is being cautious because no one knows what will happen with macroeconomic conditions,” Kosman says.

“There is so much uncertainty in the world right now between armed conflict globally and economic conditions. Climate and the weather are having a big impact as well,” Kosman says. “Some regions are experiencing heat and drought, which is impacting agriculture, including timber. Other regions are being hit with storms and flooding. In the case of storms, these require rebuilding and reroofing following any damage that might occur. This brings an increase in demand for wood outside of the new housing construction market.”