Plywood and Engineered Wood Manufacturers NAICS 3212

Sep 23, 2025 - Sawmills Trim Production Amid Drop in Lumber Futures

• Plywood and engineered wood product manufacturers may experience margin relief as log and lumber prices drop. Lumber futures have plunged since early August, signaling economic caution amid trade uncertainty and a weakening housing market, according to The Wall Street Journal. Spot prices saw a similar drop over the same period. A glut of wood - stockpiled in anticipation of higher tariffs on Canadian imports - has collided with softening demand, prompting major producers like Interfor and Domtar to curtail output. While high lumber prices during the pandemic stemmed from inflation and supply chain strain, current declines result from reduced construction activity and tariff volatility. While an oversupply of lumber and logs could reduce input costs for plywood and engineered wood product manufacturers, it also signals weaker demand.
• Mortgage applications for new home purchases increased 1% in August 2025 compared to the same month a year earlier, but were down 6% from July 2025, according to the Mortgage Bankers Association (MBA). The MBA’s seasonally adjusted estimate for new home sales in August was up 6% from July’s pace of 685,000 units. August marked the third consecutive rise in estimated new home sales. According to MBA Vice President and Deputy Chief Economist Joel Kan, housing inventory is rising, giving potential buyers more options while reducing upward pressure on housing prices.

• The average 30-year mortgage rate was the lowest in nearly a year in the second week of September, increasing buying power for would-be homeowners, but headwinds for a housing recovery remain, according to The Wall Street Journal. The week of September 18, the weekly average for a 30-year fixed-rate mortgage was 6.26%, down significantly from 7% at the start of 2025, and marking the lowest rate since October 2024, according to Freddie Mac. Industry insiders suggest the frozen housing market may begin to thaw when rates are consistently below 6%, a financial and psychological signpost for many. However, affordability remains a challenge as home prices are about 50% higher than in 2019. Insurance and property tax costs are also elevated. Signs of a slower labor market may also give some potential buyers pause.
• Single-family housing starts fell 7% month-over-month and decreased 11.7% year-over-year in August. The number of building permits issued for single-family, privately-owned housing units dropped 2.2% month-over-month and fell 11.5% year-over-year in July 2025. With just 890,000 single-family homes breaking ground, August marked the lowest activity since April 2023. Builders may be slowing production amid a mounting oversupply of new homes on the market, according to Reuters. The Federal Reserve cut its benchmark overnight interest rate from 4.25% to 4.0% on September 18 amid a tepid labor market, and the central bank is expected to announce more cuts before the end of the year. In anticipation of the Fed rate cut, mortgage rates moved lower earlier in September. Industry insiders hope rate cuts will ease a prolonged housing slump.