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Softwood Lumber Outlook for 2018 Shaped by Wildfires, Tariffs

Filed in Business ManagementEconomics on January 4, 2018

Softwood lumber prices closed out the year at or near record highs in most areas of the country — making the average Random Lengths Composite Price for 2017 the highest in 20 years.

Prices surged early in the year due to the arbitrary tariffs levied on softwood lumber imports from Canada, which impacted roughly one-third of U.S. supply,” said David Logan, NAHB’s tax policy analyst who continually monitors the pulse of building materials prices.

“Then in mid- to late-2017, widespread wildfires in British Columbia and the Pacific Northwest, combined with the damaging hurricanes in the south, resulted in tighter supply and fueled further price increases,” he said.

According to Logan, the outlook for lumber prices in 2018 is more of the same. Lumber supply will gradually increase as forests and mills in Canada and the Pacific Northwest recover from a devastating wildfire season. And historically, as production and supply improve, prices begin to moderate.

“We’ve already seen the effects of increased capacity in the OSB market, in which prices have fallen substantially from record levels in mid-2017 as new and idled mills have come online,” Logan said.

However, he notes that any price decline that would result from increased lumber supply will likely be offset by the duties on Canadian imports, which could have significant impacts on the housing industry and the broader U.S. economy.

Go to eyeonhousing.org for additional market insights.

 

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