Total starts reached a seasonally adjusted annual rate (SAAR) of 1.372 million units, according to the US Census Bureau. Single-family starts were virtually unchanged at 970,000 units, while the multifamily sector increased 6.3% month over month to 402,000 units.

Multifamily starts trend downwards, in contrast to single-family

Despite October’s readings, the plunge in multifamily starts year over year has contrasted with a growing single-family sector. Total starts have fallen 4.2% from the year-ago pace, with single-family climbing 13.1% and multifamily declining 30.0%.

On a regional basis, total starts fell month over month in the Northeast and South, while the Midwest and West increased. That pattern has held true on an annual basis as well.

The solid increase in single-family starts in 2023 has run counter to builder sentiment, which has declined for four consecutive months to its lowest level in nearly a year. The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index was reported at 34 in November, a six-point drop from the October reading.

“The rise in interest rates since the end of August has dampened builder views of market conditions, as a large number of prospective buyers were priced out of the market,” said Alicia Huey, chairman of the NAHB.

Housing permits in November inched up 1.1% from October to 1.487 million units (SAAR). Permits have declined 4.4% from the year-ago level.

Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for timber/lumber, other wood products, or speak to our team about accessing our news, analysis, forecasts and more.

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Many millennials have become homeowners, but a significant portion of them is still waiting to jump into the housing market. Not only are they facing tight inventory due to more homeowners keeping their ultra-low mortgage rates, but the competition for prime real estate has been exacerbated by continued buying by baby boomers. Mortgage rates are surging past 8.0%, dampening what had already been a challenging market to become a homeowner.

We know the challenges ahead for the housing market over the medium term, namely these higher borrowing costs. But the larger question looming is what do the demographics tell us about what we can expect longer term? Once we have these higher rates behind us, can we expect demographics to still be a strong tailwind? And an equally important question for market analysis is how truly under-built is the US housing market?

Long-term US population growth is revised downwards

The Census has not been updated since 2017. Without updated Census numbers, Fastmarkets pivoted to another reputable data source for the nation’s long-term demographic profile. The Congressional Budget Office (CBO) released its latest estimates by age class in January 2023; its projections are lower than what the Census predicted in 2017. In 2037, the end of our forecast interval, the CBO currently projects the total US population will be 357.6 million, while the 2017 Census projected 368.4 million for that year — a difference of 11 million people (Figure 2). From 2023 to 2037, the CBO expects the US population to grow by about 0.4% per year, compared with the Census estimate of 0.6% per year, driven almost exclusively by immigration as birth rates will remain well below replacement rates over the forecast.

However, on the plus side, the CBO projections are more positive than what was released in July 2022, thanks primarily to higher immigration levels that are now tracking above pre-Covid-19 levels. According to the Migration Policy Institute, the US accepted 1 million immigrants as permanent residents in 2022, on par with pre-pandemic trends. Moreover, the State Department reported that it issued nearly 517,608 immigrant visas in FY22, over 50,000 more than in FY19. With one month left in FY23, the State Department issued another 588,611 immigrant visas, a 14% increase over the prior year.

Despite mortgage challenges, headship rates improve

Despite rapidly rising mortgage rates, household formations trended well above 1.0 million units in 2022 and continued to do so in the first two quarters of 2023. In 2022, households rose by 1.7 million units, with households that owned homes significantly outpacing those that rented. The headship rate ‒ which is defined as the number of total households divided by the population ‒ can be used to calculate a proxy for household size. But in a sign of how heated the housing market had become, those headship rates, while still low historically, have improved significantly. In 2022, the headship rate for the key demographic of 25-34-year-olds held at 44.6% compared with a low of 42.9% in 2017. The rate for 35-44-year-olds improved as well, rising to 51% in 2022 from a low of 49.2% in 2018. The improvement in the headship rate has been supportive of above-trend household growth despite the much slower population gains.

Headship rates could even be higher if not for the fact that the share of young adults living at home has been quite high, which is another element of the pent-up demand story. That share climbed after the Great Recession and has remained stubbornly high. The share hit a record level in 2020 as the pandemic ravaged the gig economy and hit young workers especially hard. The share dropped in 2022 and fell to 32.3%, slightly above the 2019 level of 31.6% but will remain high historically, partly due to affordability issues that are growing more acute (Figure 3). With the labor market holding up well in 2023, we expect the share of young adults living at home modestly fall again. But mortgage rates of over 7.0%, the resumption of student loan payments, high rental rates and general shelter affordability challenges will limit how much lower this share can go in the near term.

This share of young adults living at home has meant far fewer people in the shelter market than what the demographics would suggest. In a comparison of the headship rate of millennials to Generation Xers and baby boomers when they were 26-41 years old, Fannie Mae found that the headship rate of both boomers and Gen Xers was 53% at that age range. If millennials had formed households at the same rate as boomers and Gen Xers, the shelter market would have an additional 3 million households.

Large population increases are due to decline

Despite the lower headship rates and more young adults living at home, the sheer size of the millennial generation has been historic. But given current demographic projections, this surge in the population aged 25-34 is unlikely to continue. While the country will still have a high number of these prime-aged homebuying adults through the next few years, the large population increases are now in the rearview mirror. The average homebuying age is 31-32 years old. According to the US Census, between 2009 and 2019, over 5.2 million Americans entered the prime homebuying cohort of 25-34, but this age group will not continue to grow at such a fast clip in the next decade. While we have seen an upward revision to the latest CBO population growth projections, this massive demographic boost being over is still preserved.

Between 2022 and 2032, the population aged 25-34 will grow by 438,000 people to reach 46.4 million. Although this is an upward revision from -89,000 people in the 2022 CBO outlook, this is significantly slower than the millions recorded in the previous decade. Overall, the population in the next decade will grow more slowly, gaining about 15 million people from 2022 through 2032, compared with over 21 million people from 2009 to 2019.

While the 25-34 year olds will grow less robustly, the country will see continued gains for the 35-44 year old group. From 2009 to 2019, this age group basically trended sideways, averaging 41.7 million people in 2019, about where it was a decade before. But from 2022 through 2032, the age class will gain 3.3 million people. This age group is a bit older for first-time buyers, but it will likely mean more repeat buyers in the market potentially looking to trade-up from their first home.

Although this outlook for population is less positive over the long term, the market has not been building enough homes in the last decade to meet the household growth the US has been experiencing. In particular, there have not been enough starter homes, and that has been worsening the affordability crisis of the last few years. But how under-built is the current shelter market? Assuming a target vacancy rate of about 12% (a more normal level of housing inventory) and a total headship rate of about 51%, Fastmarkets estimates that the market is currently under-built by about 2.0 million units. So, while we are expecting slower population growth, there is still an under-supplied element to the forecast that will be supportive of construction running above household formation trends in the medium term.

For more information on how the demographic updates affects our housing and wood products demand outlooks, check out our latest 15-year forecasts on the customer portal, or speak to our team about accessing our news, analysis, forecasts and more.

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Demand outlook: a promising future for southern yellow pine

The webinar began with Dustin Jalbert, who gave an overview of the North American lumber market and the drivers that will impact its anticipated short-term growth.

He commented on the robust demand for lumber in the US and that Fastmarkets projects US lumber consumption to grow by 18% through 2027. It was highlighted that this growth was primarily fueled by residential construction and repair and remodeling activities.

His forecast also projected steady growth in demand for SYP over the next five years, increasing its market share over the decade. An expected increase of about 9 billion board feet is anticipated, driven by factors such as an underbuilt housing market and the availability of home equity.

The versatility of SYP, combined with its potential for further market share growth, makes it an increasingly attractive option in the lumber industry.

Softwood lumber supply challenges: confronting the constraints

Another theme discussed was the supply challenges within the broader North American lumber market. Adverse factors such as the declining annual allowable cut in British Columbia, pine beetle impact, wildfires and policy changes have led to many mill closures and constrained production.

Despite these challenges, the US South has seen a historic build-out and capacity expansion in SYP, effectively compensating for the capacity losses in British Columbia. Its proximity to the residential construction market has played a significant role in this success.

Jalbert highlighted the US South as a crucial player in meeting the growing demand for SYP. Blessed with abundant mature timber, the US South is also seen as having a natural cost advantage, making it an ideal location for increased production.

The chart below reveals that the South’s expansion in recent years has more than compensated for these capacity losses in British Columbia. “This is going to continue at a pace of about a billion board feet per year,” Jalbert said.

Unraveling the unique characteristics of southern yellow pine

This section of the webinar focused on the unique features of SYP, which are driving its adoption, but also present challenges for the industry. Dominant in treated applications, Jalbert pointed out that SYP allows for smaller, more frequent volumes and faster delivery.

Given its traditional truck market distribution and its capacity for direct-to-market distribution models, Jalbert was able to underscore its potential. However, the industry must navigate certain challenges associated with SYP, such as stability issues when moving through different humidity zones.

Its unique market characteristics result in distinctive price differentiations. This reinforces the need for a separate evaluation of its market dynamics going forward.

Creating new lumber futures contracts

Alison Coughlin from CME Group delivered the final segment of the webinar. This section outlined the intricate process of creating a new lumber futures contract.

Coughlin emphasized that the journey to creating a new futures contract begins with the customer. The most successful products originate from customers’ expressed needs for a specific new product. Market research then begins to understand the size, makeup, natural longs and shorts, transportation system, key pricing points and supply and demand fundamentals of the market.

She also highlighted the importance of considering price correlation with existing products. One might prefer a less precise hedge in a very liquid market, versus a precise hedge in a less liquid one.

Finally, Coughlin discussed settlement methods. There are two options: physical delivery and cash settlement. For instance, with a lumber (LBR) contract, there is a physical exchange of acceptable species at expiry. This method necessitates deep liquidity to establish trust.

To see every key point and insight raised in the discussion, you can watch the full webinar recording here. Visit our dedicated market pages for more information on lumber news, prices and short or long-term forecasts.

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The decreased supply of WSPF can be attributed to several factors. Firstly, an infestation of bark beetles has affected the spruce trees in Western Canada, reducing production capacity. Also, wildfires have damaged forest stands and forced salvage harvesting, ultimately reducing the log availability over the longer-term horizon. Policy factors, including reduced harvest in old-growth forest stands in British Columbia, along with US Department of Commerce duties applied to Canadian lumber to US, have and will continue to be headwinds for future supply growth in the region.

Conversely, American southern yellow pine (SYP) has experienced steady growth in production over the past few years, advancing by over 10 billion board feet (bbf) since 2009 at the bottom of the housing crash and has continued to hit all-time records since 2019. SYP lumber is mainly plantation grown in the southeastern US and is renowned for its strength and performance in treated applications.

The recent decline of western spruce-pine-fir

Recently, we’ve seen a major round of indefinite and permanent closures in British Columbia in response to weak market conditions, totaling 1.5 bbf over the last 12 months. On top of this, Fastmarkets’ wood products economists estimate that to date in 2023, over 1 bbf of temporary production cuts have been taken as mills look to rebalance an oversupplied lumber market, or equivalent to about 3% of domestic supply on an annualized basis.

As reported in a recent edition of Random Lengths, overall production in North America through May 2023 totaled 24.22 billion board feet, a 4.9% drop from the same period of 2022. Output in the US fell 1.9% to 15.66 bbf, while the drop north of the border was more dramatic, as Canadian production fell 9.8% to 8.56bbf.

Hover over the chart below and use the arrow to click through this three-page data story.

Although overall production this year is unlikely to be positive given demand has fallen as a spike in interest rates drives housing demand downward, the situation is particularly gloomy in the British Columbia region. Lumber production is off by 17.7% (Jan-May year on year), far higher than any other producing region. Structural challenges with log supply and duties mentioned above have driven production costs to levels that have been particularly painful at current price levels as demand remains soft.

The recent supply reductions in British Columbia reflect longer-term secular trends in supply seen out of the region. When lumber market fundamentals weaken, we have and will continue to see continued rounds of supply reduction from the area as it copes with structural challenges that place it as the high-cost supplier of dimensional lumber in North America.

The future looks bright for SYP lumber: short-term forecast

While the production cuts in British Columbia are a key headwind to the supply forecast over the coming years, supply growth in the US south is expected to help fill the void.

Contrary to the situation in British Columbia and Western US, the south has an overhang of timber supply, which is keeping production costs in the region competitive and returns for new mills investments very attractive. As a result, we are seeing a historical build-out in sawmill capacity in the region, which will continue to make its way into the North American and global marketplace.

Over the longer term, we anticipate more builders will substitute less readily available WSPF for SYP out of necessity, which will keep the overall lumber market competitive as SYP lumber volume seeks a home in the marketplace. Meanwhile, fiber constraints in WSPF will be subject to further pricing volatility due to capacity closures in Canada, policy uncertainty and supply chain challenges as increasing wildfires and challenging winters disrupt shipping.

Over the coming years, we also predict the follow market developments:

• We forecast that the US South will continue to take a share of the total North American production mix over time.
• We expect the South’s share of US production to rise from 34% in 2018-22 to 39% from 2023-27 as demand grows and the South provides the only meaningful economical sources of incremental supply over the horizon.
• The South will see its share of North American offshore exports rise as it continues to be incorporated in new applications and Canadian supply becomes increasingly burdened by fiber constraints.

In conclusion, the future of the North American lumber market seems to be leaning towards southern yellow pine as it continues to gain popularity and market share over Western Spruce Pine Fir. The reasons behind this growth trend are multifaceted, but it’s clear that demand and supply factors, as well as climatic conditions, are playing a significant role.

To discover more about our lumber and wood products forecasts visit our page. For regular updates on the North American market subscribe to our Random Lengths newsletter.

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The price correction was triggered by a combination of demand falling off after peaking in the spring of 2021 and supply-side disruptions from the pandemic dissipating as mill headcounts normalized and transportation/logistics shortages ceased.

US softwood lumber prices collapse from mid 2022

While 2020 and 2021 were phenomenally profitable years for the industry, since the spring of 2022 prices have collapsed below critical break-even levels for North America’s high-cost supplying regions for dimensional lumber: the British Columbia Interior and US West Coast. Prices dragging along at the cash cost levels for these supplying regions has been detrimental for a market facing much higher converting costs than prior to the pandemic.

According to the latest Fastmarkets North American lumber forecast, softwood sawmill capacity in BC and the US West Coast totaled 11.8 billion board feet (bbf) and 10.7 bbf in 2022, respectively, or about 31% of the industry capacity base. With a substantial percentage of the industry supply base now cash negative, it is no surprise that we have seen a substantial round of closures over the last 12 months, as our wood products team has been warning since early last year when demand starting correcting.

Using mill data compiled in the Fastmarkets mill asset database along with some supplementary analysis from our analytics team, we have mapped the announced closures across North America over the past year. To date, 1.7 bbf of indefinite or permanent closures have been announced across North America since prices began to come back to earth last year. This equates to about 2-3% of the North American softwood sawmill capacity base, marking a notable cut to industry supply.

The majority of lumber capacity losses are in the Northwest

As is clear from the timelapse, almost all the announced capacity is in the Northwest and British Columbia, the latter accounting for the lion’s share of the announcements. Readers can scroll over the individual bubbles in the figure below to gather information on the mill closure. BC’s total contribution to the capacity losses in this round of cuts, starting in the third quarter of 2022, is about 1.5 bbf, though it should be noted that 200-300 million board feet (mmbf) of these cuts are indefinite rather than permanent closures.

Long-term structural factors contribute to the slowdown

Readers will recall that the province suffered through similar capital destruction in 2018 and 2019 that culminated in over 2 bbf of closures in the province. Much like the current round of capacity cuts, the proximate cause of the shutdowns was compressed margins as prices sank below cash costs for months while demand and supply in North America rebalanced.

However, long-term structural factors are also contributing to the pain. A reduced annual allowable cut in BC stemming from long-term consequences of the mountain pine beetle epidemic and recent harvesting restrictions on old growth land tenures is keeping fiber constrained and driving up sawmill production costs. Duties on Canadian lumber shipped to the US are also impacting profitability.

Fastmarkets North American lumber forecast points to about 1.5 bbf of permanent closures awaiting the market from the recent market downturn, suggesting a few more sawmill closure announcements could be in order even as we see some green shoots of a demand recovery.

Want to know when Fastmarkets expects the market to turn around and how the supply picture is set to expand next year? Check out the latest edition of the Fastmarkets lumber commentary or the North American lumber forecast.

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Wildfires intensified over the weekend, forcing more people living in the interior of British Columbia to evacuate their communities.

“The current situation is grim,” said British Columbia Premier David Eby.

One of the latest major fires is near Kelowna. About 35,000 people in that area were under an evacuation order early in the week. Meanwhile, a fire near Yellowknife, the capital city of the Northwest Territories, forced evacuations of nearly all of its residents.

Multiple fires near Adams Lake in the Shuswap region of British Columbia burned blocks of homes in several communities, according to news reports. A mill in the area survived the blaze, but was surrounded by fires.

Fires shut down some sections of key highways. Portions of the TransCanada highway were closed, the main artery between Vancouver and Eastern Canada. A ban on non-essential travel was ordered in B.C. so that firefighters, emergency crews, and evacuees could stay in vacated hotel rooms.

Canadian log availability is under threat

One Canadian producer went off the market late last week in response to the fires and their potential effect on future log availability. Others were monitoring the situation closely.

According to the Canadian Interagency Forest Fire Centre, the area burned so far this year surpassed 15 million hectares. That total is equivalent to 37.1 million acres, roughly the size of Georgia. The area burned so far is also over twice as large as the previous record of 7.1 million hectares set in 1995.

Through August 22, 5,881 fires were started across Canada, more than last year’s total but less than 2021. Active fires totaled 1,034, with 651 of them classified as “out of control.”

Natural Resources Canada reports that drought and above-normal temperatures in July throughout much of the country have been key contributors to fire activity. Abnormally dry and moderate drought conditions have expanded into northern Yukon and northern Northwest Territories.

Although the area burned in Canada continues to grow, the pace set early in the season has eased. However, ongoing drought in Canada is expected to allow large fires to continue burning into the fall.

Meanwhile in the US, the National Interagency Fire Center reports that 83 current wildfires have burned 622,775 acres in more than 16 states. For the year 36,957 fires have torched more than 1.8 million acres across the country.

Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for lumber, other wood products, or speak to our team about accessing our commentary, analysis, forecasts and more.

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Imports from the 10 largest European suppliers fell to 428 million board feet (mmbf) in the second quarter, down 30% from the record-setting first-quarter volume of 610 mmbf and lagging the year-ago total by 12%. European shipments to the US declined to the lowest quarterly total since the last three months of 2021.

US imports from Europe through the first half reached 1.04 billion board feet (bbf), up 12% compared to the year-ago pace through June. Shipments jumped 38% in the first quarter compared to the 2022 pace through March after reaching all-time highs last year.

Many traders anticipated European exports to the US to continue a downward trend through at least the third quarter and to fall short of last year’s record levels. Declining production in Europe has contributed to the fade in exports to the US.

US softwood lumber exports slip

North American exports to offshore destinations, meanwhile, continued to flounder amid weak demand in most key markets. But a modest rebound in the second quarter mitigated the downward trend. Canadian overseas exports slipped to 769 mmbf in the first half, down 3% from the year-ago pace. US exports offshore slipped to 194 mmbf through June, down 4% from the volume shipped in the first half of 2022.

Total US imports from overseas shippers worldwide posted a 5% gain in the first half, reaching 1.32 bbf. Second-quarter volumes, however, plummeted to 575 mmbf, down 12% from the same three months in 2022 and lagging the first-quarter volume by 23%.

Plantation Pine imports declined to 219 mmbf in the first half, down 16% from the year-ago pace. US demand for Pine from South America and New Zealand has remained relatively weak all year amid ample availability of domestic Southern Pine. Imports from Canada also faded in the first half, falling 9% to 5.96 bbf. The decline pulled total imports down 6% to 7.29 bbf.

Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for lumber, other wood products, or speak to our team about accessing our commentary, analysis, forecasts and more.

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Framing lumber traders could be forgiven for feeling that way about the market so far this year.

Through the first seven months of 2023, the Random Lengths Framing Lumber Composite Price (FLCP) has had three upswings. The first one, in January and early February, lasted five weeks and the composite gained a total of $73 during that span.

The second spurt ran from mid-March through mid-April. In a span of six weeks, the FLCP was flat twice and gained a total of $18 over the other four weeks.

The third run went from mid-June and went six weeks through mid-July. The total gain over that period was $81. Through the end of July, the FLCP had gone up 15 weeks thus far in 2023, dropped for 12 weeks, and was flat for the other three weeks. At the end of 2022 the FLCP sat at $380, while it was $463 at the end of July 2023.

First half of 2023 compares favorably to previous years

Based simply on the numbers, the first seven months of 2023 weren’t too bad in the lumber markets. While a gain of $83 since the end of last year may not seem like much, it compares quite favorably not only to what transpired the last couple of years, but historically as well.

In 2022, the FLCP plummeted $389 through the end of July when compared to how the previous year ended. That was nearly identical to the $395 drop registered in the previous year. In 2020, soaring demand early in the covid-19 pandemic pushed the price up a record $254 in that period.

Over the last 10 years, the FLCP gain in the first seven months of 2023 is the highest aside from 2020 (chart), and the most since a $137 gain in the like period of 2004. The FLCP has gained in six of the last 10 years, including five straight years from 2016 to 2020.

Although the numbers would suggest a positive first half of 2023, sentiment and anecdotes don’t seem to back that up. A sense of confidence among buyers and a willingness to speculate are often evident in positive markets.

Instead, a particular concern among traders this year has been the ongoing lack of interest and urgency from buyers. Throughout 2023 to date, buyers have become accustomed to being able to wait until the last minute and fill in holes with prompt truckloads, or even partial truckloads. Speculative purchases have been next to nil for many months.

In addition, the strongest run thus far in 2023, the third one, came on the heels of a surprisingly strong May US housing report. There was plenty of skepticism about the robust numbers in the report, and once the revised and drastically lower numbers came out a month later, any sense of urgency disappeared from the market.

As such, traders have tended to look at that third run – as well as the other two shorter, modest upticks – as examples of the fire in the market not being sustained after initially catching. Each of the three times, producers felt things were finally going somewhere. Each time, modest gains realized were quickly washed away and buyers only came off the sidelines to plug pressing holes.

Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for timber/lumber, other wood products, or speak to our team about accessing our news, analysis, forecasts and more.

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Imports through the first half reached 9.47 million cubic meters, up 15% from the 2022 pace. Prior to this year, Chinese imports had fallen steadily for more than a decade. Shipments fell 10% in 2022 and plunged 23% in 2021 compared to 2020, according to statistics from Trade Data Monitor.

Europe and Russia were the primary drivers pushing Chinese imports up 9% in the first quarter, while North American suppliers continued to lose market share. However, shipments from the US and Canada rebounded in the second quarter after fading sharply from January through March and posted modest first-half gains as a result.

Chin continues to be main target for Russian lumber exports

Imports from Russia reached 5.90 million cubic meters in the first half, up 6% from the year-ago pace. China remains a primary target for Russian exports because many other countries have imposed trade sanctions on Russian products in response to the Ukraine War. China is traditionally Russia’s largest foreign market for softwood lumber and has not imposed war-related trade sanctions.

European exports to China jumped 42% through the first half compared to a year ago, reaching 2.14 million cubic meters. China and the US are the primary destinations amid Europe’s rapid expansion in overseas shipments this year.

Russia and Europe combined accounted for 85% of total Chinese imports through the first half, unchanged from the market share through the first six months of 2022.

Canadian exports reached 732,345 cubic meters in the first half, up 3% from the year-ago pace. Canadian shipments were heavy to Western spruce pine fir. Chinese imports from the US increased 33% to 80,795 cubic meters. North America’s share of the Chinese import market slipped from 9% to 8.5% through the first half of last year.

Radiata Pine imports also posted steep percentage increases. Shipments from New Zealand more than doubled, reaching 104,979 cubic meters. Deliveries from Chile surged 45% to 218,045 cubic meters.

Chinese recovery fulfills predictions

The first-half recovery in total Chinese imports supported predictions from many analysts that demand would strengthen later in 2023 as the country’s ailing real estate sector regained its stride.

However, anecdotal evidence in recent weeks suggests the recovery in China’s real estate sector has hit headwinds after briefly regaining momentum.

Government measures to bolster real estate development and investment have not been as effective as many analysts had previously hoped, some traders noted.

Many traders have described a slower pace in recent months, creating doubt that the upward trend in Chinese imports is sustainable through the end of 2023. Further, traders note that, despite the second-quarter gains, US and Canadian suppliers still face an uphill battle to maintain market share amid competition from Russia and Europe.

Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for timber/lumber, other wood products, or speak to our team about accessing our news, analysis, forecasts and more.

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The Southern Pine Composite Price averaged $445 through the end of June. If that trend holds through the second half, SYP prices will sink to the lowest annual average since 2019, before the pandemic. Monthly averages lagged the year-ago pace throughout the first half.

However, the first-half decline in the South was mild compared to the plunge in most other species. The Random Lengths Framing Lumber Composite Price averaged $411 in the first half, down $388 compared to the average throughout 2022.

The chart shows the RLFLC average was $75 higher than the Southern Pine Composite average last year. The margin was $91 in 2021 and $33 in 2020. Many traders note that the pandemic skewed normal price patterns, especially in 2020 and 2021.

Southern Pine’s $34 premium to the broader market in the first half is unusually wide by pre-pandemic historical standards. From 2010 to 2019, the decade prior to the pandemic, the Southern Pine Composite averaged higher than the RLFLC five times. The broader North American market outpaced the South an equal number of years during that time frame.

The gap between the two composites spanned $11 or less seven of those 10 years and expanded beyond $30 only once, in 2016.

Southern Pine prices resilient against market conditions

Southern Pine’s price strength relative to other species appears somewhat remarkable to many traders, given that production in the South has increased steadily in recent years while output has faded among other North American species, especially in Canada.

Further, a historic surge in European Spruce imports in the first half appeared to impact the Southern Pine market more than other North American-produced species, especially narrower widths.

Southern Pine’s premium to the broader market narrowed in the second quarter. The Southern Pine Composite average was $52 higher than the RLFLC in March and maintained a $51 premium in April. The gap narrowed to $22 in June, when the RLFLC averaged $406 compared to the Southern Pine Composite of $428.

Most Southern Pine buyers anticipate a cautious, conservative tone to define trading through the balance of 2023, much as it did in the first half.

Mixed signals in the housing market and ongoing uncertainty in the broader economy have kept Southern Pine buyers guessing about the market’s future direction throughout the year.

European Spruce imports have eased in recent months from the record pace evident in the first quarter. Myriad other factors, however, will figure prominently in second-half price trends.

Want to learn more about the lumber market, prices, or forecasts? Check out our dedicated page for timber/lumber, other wood products, or speak to our team about accessing our news, analysis, forecasts and more.

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