U.S. Lumber Futures Sink Near $523 as Housing Weakness Outweighs Mill Cuts

U.S. lumber futures have fallen sharply from their summer highs despite widespread North American mill closures, lower Canadian production and heavy duties on Canadian softwood. The benchmark November contract closed at $523.50 per thousand board feet on October 5 as high mortgage rates and weak housing demand continued to limit buying.

By Paul Ploumis
Published October 6, 2026

Courtesy: Wood Central

MONTREAL (Scrap Monster): U.S. lumber futures have fallen to their lowest levels in roughly two years, highlighting a growing disconnect between constrained North American production and a housing market that remains too weak to generate sustained lumber demand.

The benchmark November lumber contract settled at $523.50 per thousand board feet on Monday, October 5, extending the decline from $526.50 on Friday.

At Friday's level, lumber was already approximately 14.5% below its year-earlier price and down 8.3% over the previous month.

The latest decline has come despite mill closures, curtailments, lower Canadian output and continuing trade barriers that would normally be expected to support prices.

Lumber Falls Sharply From July Supply Scare

The current market is a sharp reversal from late July.

Lumber climbed toward a one-year high above $640 per thousand board feet as wildfires across Western Canada raised concerns about timber harvesting, transportation and sawmill supply.

More than 900 wildfires were burning across Canada as a whole during the height of the summer fire season, including significant activity in British Columbia, Canada's largest lumber-exporting province.

Evacuation alerts and fires in timber-producing regions added another layer of uncertainty to a market where available mill capacity had already contracted.

The benchmark subsequently traded around $650 in late July before reversing lower through August and September.

By early August, the contract had moved back below $600, and the October 5 close at $523.50 shows how quickly the summer supply premium disappeared.

Mill Closures Have Removed North American Capacity

The price decline is notable because North American lumber supply is not abundant.

Weyerhaeuser Chief Executive Devin Stockfish said earlier this year that roughly 50 mills had been shut down or curtailed across North America over the preceding two years.

Those closures helped tighten lumber availability during the first half of 2026, particularly when dealers entered the spring construction season carrying relatively lean inventories.

On Weyerhaeuser's second-quarter earnings call, Stockfish described U.S. housing activity as remaining “stuck in second gear”, citing weak consumer confidence and persistent affordability problems.

That combination explains much of the current market imbalance: producers have cut supply, but demand has not improved enough to keep prices elevated.

Mortgage Rates Return Above 7%

The housing market has faced an additional setback from higher borrowing costs.

Freddie Mac reported that the average 30-year fixed mortgage rate reached 7.28% on October 1, up from 7.03% the previous week.

A year earlier, the comparable rate was 6.34%.

Higher financing costs reduce purchasing power for prospective homebuyers and can delay new construction, particularly in the single-family segment where lumber usage is most intensive.

That demand pressure helps explain why lumber futures have continued falling even as North American sawmill supply remains constrained.

New-Home Sales Improve, But Remain Below 2025

U.S. new-home sales showed some monthly improvement in August but remained below year-earlier levels.

The Census Bureau reported that new single-family homes sold at a seasonally adjusted annual rate of 684,000 units in August.

That was 6.4% above July's revised rate of 643,000 but 2.0% below August 2025.

The median new-home sale price was $393,700, down 5.8% from $417,900 a year earlier.

Approximately 483,000 new homes remained for sale at the end of August, equivalent to 8.5 months of supply at the current sales pace.

Mill-Side Lumber Prices Have Held Up Better Than Futures

The decline in futures has not been mirrored exactly in producer pricing.

The U.S. Bureau of Labor Statistics' seasonally adjusted Producer Price Index for lumber reached 296.4 in July, its highest level since September 2022.

The index eased to approximately 290.0 in August, but remained well above the 269.3 level recorded a year earlier.

This distinction matters because CME futures and the Producer Price Index measure different parts of the market.

Futures reflect expectations for standardized exchange-traded lumber contracts, while the PPI measures prices received by domestic producers across a broader range of lumber products.

The result is a market in which futures have fallen rapidly while mill-side pricing has shown greater resilience.

Canadian Lumber Production Falls 6.7%

Canadian sawmills are also producing less lumber.

Statistics Canada reported that lumber production fell 6.7% year over year in July to approximately 3.55 million cubic metres.

Production was also down 8.6% from June.

Sawmill shipments totaled approximately 3.73 million cubic metres, down 7.8% from July 2025 and 10.3% from the previous month.

The July decline was substantially deeper than the year-over-year drop recorded in June and adds to evidence that Canadian producers continue to adjust capacity in response to weak demand, high costs and trade barriers.

Canadian Softwood Still Faces Heavy U.S. Duties

Trade policy remains one of the most consequential factors affecting Canadian softwood lumber entering the United States.

Most Canadian producers covered by the current U.S. antidumping and countervailing duty regime remain subject to combined cash-deposit rates of about 35.16% under the sixth administrative review.

Those duties remain in effect until the U.S. Department of Commerce publishes final results from its seventh administrative review for participating companies.

Commerce's current post-preliminary calculations suggest that the combined rate for non-selected companies could fall to roughly 25%, but those rates are not yet final and are not currently in effect.

Separately, the United States imposed a 10% Section 232 tariff on softwood timber and lumber beginning October 14, 2025.

The Section 232 tariff is charged in addition to applicable antidumping and countervailing duties.

Home Builders Continue to Push for Tariff Relief

The National Association of Home Builders has repeatedly argued that lumber duties worsen an already difficult affordability problem for U.S. homebuyers.

In April, NAHB said housing affordability was near historic lows and called on the administration to suspend tariffs on Canadian lumber and other construction materials.

The organization also urged Washington to negotiate a new U.S.-Canada softwood lumber agreement that could eliminate the recurring tariff dispute.

Builders argue that tariffs raise material costs, while U.S. lumber producers maintain that trade remedies are necessary to counter what they consider unfair Canadian pricing and subsidy practices.

Supply Cuts Have Not Been Enough to Support Futures

The current price action demonstrates how weak demand can overwhelm tightening supply.

Over the past two years, North America has lost significant sawmill capacity. Canadian production remains below year-earlier levels. Wildfires temporarily threatened timber supply during the summer. Canadian lumber entering the U.S. also faces substantial trade costs.

Yet lumber futures have still fallen below last year's levels.

The reason is increasingly clear in the housing data.

Mortgage rates above 7%, high home prices, cautious consumers and a large inventory of unsold new homes are limiting the pace of lumber-intensive residential construction.

Market Read

The U.S. lumber market has moved from a summer supply scare to an autumn demand problem.

In July, wildfire risk, mill closures and constrained Canadian supply pushed futures toward one-year highs.

By early October, those same supply constraints remained in place, but the benchmark had fallen to roughly $523 per thousand board feet.

The divergence between futures and the producer price index reinforces the complexity of the market. Futures traders are pricing a weaker demand outlook, while the prices received by mills have so far held up better.

For sawmills and timber suppliers, the next major catalyst is likely to come from housing rather than production.

A meaningful decline in mortgage rates or improvement in single-family construction could tighten the market quickly because so much North American capacity has already been removed.

If borrowing costs remain elevated and housing stays subdued, however, reduced mill supply alone may not be enough to restore the summer lumber rally.

Courtesy: Wood Central