Lumber Distributors NAICS 423310

Nov 23, 2025 - Builders Struggle to Sell New Homes Despite Incentives

• America’s largest homebuilders are struggling to sell new homes despite offering 4% mortgages and deep discounts, according to The Wall Street Journal. D.R. Horton and Lennar have slashed prices and added incentives, but demand remains weak, pushing unsold inventory to levels last seen in 2009. Builders are slowing construction, with D.R. Horton cutting starts by 21% year over year for the three-month period through September. Regional gluts in Texas, Florida, Southern California, and Washington, DC reflect rising resale competition, fewer foreign buyers, and economic uncertainty. Investor activity is at a 15-year low, with institutional buyers demanding steep discounts that builders won’t meet. New homes, often located in less desirable areas and targeted at first-time buyers, are more challenging to sell.
• Lumber distributors could see demand soften amid a weak housing market and more cautious home improvement spending. Home Depot and Lowe’s faced headwinds in the third quarter as housing market weakness and economic uncertainty dampened home improvement demand, according to Retail Dive. Home Depot’s net sales rose 2.8% over Q3 2024, boosted by its $900 million acquisition of GMS, but net income fell 1.3%. Comparable sales were nearly flat. Lowe’s reported a 3% year-over-year sales increase, with gains in pro sales, home services, and online purchases, though net income fell 4.7%. Both retailers cited weaker demand for large discretionary projects and revised their outlooks downward. Each continues to target professional customers, with Home Depot acquiring GMS and Lowe’s planning to acquire Foundation Building Materials. The sector remains pressured by cautious consumers and limited housing activity.

• Rayonier and PotlatchDeltic announced plans to merge in an all-stock deal valued at $7.1 billion, creating one of the largest US forestry companies with 4.2 million acres of timberland, according to The Wall Street Journal. The merger positions the combined entity as a major force in the lumber industry, second only to Weyerhaeuser, and strengthens its reach across the Northwest and South. PotlatchDeltic’s sawmills in Arkansas, Idaho, Michigan, and Minnesota are expected to benefit from tariffs on Canadian softwood lumber, which have lifted U.S. prices amid volatile housing and construction markets. The deal also highlights diversification opportunities, as both companies profit from leasing land to solar developers at rates far higher than timber returns. With Rayonier CEO Mark McHugh set to lead the merged company, the transaction underscores consolidation in the lumber sector and signals stronger domestic supply chains for distributors.
• North American construction spending on residential construction in 2026 is expected to rise 1% after decreasing an estimated 2% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Single-family construction is expected to face sluggish growth, as mortgage rates are anticipated to remain at 6%-6.5% early next year. Household incomes have not kept pace with rising median home prices, contributing to the lack of affordability. In response, builders have focused on entry-level and built-for-rent homes with fewer bells and whistles, especially in more affordable regions of the country, including the South and Midwest. Single-family construction spending is expected to rise 1% in 2026, 2% in 2027, 4% in 2028, and 5% in 2029. Multifamily construction is expected to decrease by 2% in 2026, amid oversupply in some key markets and weak rent growth. Amid stronger absorption and falling vacancies, multifamily construction spending is forecast to rise 5% in 2027, 8% in 2028, and 9% in 2029. The rising median age of US homes and high levels of homeowner equity are expected to sustain steady remodeling spending growth of 2% in 2026 and 2027, 4% in 2028, and 5% in 2029.