Timber prices in the United States have surged to their highest level in nearly a year, despite a slowdown in home construction and weakening demand in renovation spending. Last month, the Random Lengths Framing Lumber Composite price—a weighted average of key framing timber prices—reached $535 per thousand board feet, the highest since September 2022. Although the benchmark declined slightly recently amid rising mortgage rates, it remains 23 percent above its level from a year ago.

The recent price increase is largely attributed to reduced supply rather than increased demand. Imports of Canadian softwood lumber have diminished significantly due to steep duties and tariffs imposed by the United States. Existing import taxes include antidumping and countervailing duties stemming from a decades-long trade dispute, which more than doubled last year to about 35 percent for most Canadian producers. On top of these, a 10 percent tariff under Section 232, introduced by former President Donald Trump on national security grounds, further elevated costs. While preliminary rates for combined duties are expected to drop to around 25 percent later this year, industry leaders do not anticipate these reductions will prompt the reopening of sawmills shuttered during the sector’s recent downturn.

Sawmill closures have contributed substantially to supply constraints across North America. For example, Canfor, one of the largest producers in Canada, announced it will permanently close its Fox Creek mill in Alberta by September, citing weak market conditions, logistical challenges from wildfire damage and pests, as well as the burden of US tariffs. Similar closures have affected mills throughout Canada and the US in recent years, particularly over the past year amid declining housing starts and imports.

Industry analysts suggest that timber prices have nearly peaked for the year. Rising mortgage rates and seasonal factors are expected to weigh on demand moving forward. “Given softwood lumber demand to date is pretty much flat, the supply side is clearly doing most of the work to push prices up this year,” said Dustin Jalbert, director of wood products and timber at Fastmarkets.

Home builders, including companies such as DR Horton and Meritage Homes, report that elevated timber prices are a growing cost challenge likely to be reflected in housing prices later this year. Futures prices for lumber have declined about 12 percent since late July, signaling a potential moderation in market prices.

The US Lumber Coalition, an industry group supporting the tariffs, credits them with stimulating domestic production, stating that US sawmill capacity has expanded by more than eight billion board feet over the past decade. The coalition notes that US producers now supply roughly 75 percent of the domestic market, while Canadian imports have shrunk from over 30 percent in 2016 to about 19 percent today. Some producers have announced additional investments, including $500 million in new US sawmill capacity since the implementation of the Section 232 tariff.

Despite hopes for tariff reductions to ease supply issues, leading executives remain cautious. Devin Stockfish, CEO of Weyerhaeuser, a major forestry company, indicated that many mills permanently closed during the downturn are unlikely to resume operations, reducing overall supply and sustaining upward pressure on prices.