Sawmills and Wood Preservation NAICS 3211

Jan 24, 2026 - Modest Lumber Demand Recovery in Delicate Balance with Tight Supply

• The North American lumber market enters 2026 with early signs of improving demand but far less supply flexibility than in past cycles, creating conditions for renewed volatility, according to Resource Wise. Housing activity remained weak through most of 2025 due to high mortgage rates and affordability pressures, although confidence strengthened late in the year as rates eased and sales forecasts improved. At the same time, supply tightened sharply, with Canadian production falling amid mill closures, curtailments, and high costs. While US lumber production improved slightly in 2025, it's still dependent on imports. With domestic producers unable to quickly replace lost import volumes, even modest demand growth could strain the market, raise prices, and heighten sensitivity to seasonal shifts, weather, and policy decisions. As 2026 begins, the balance between constrained supply and a tentative demand recovery will shape conditions for producers and buyers.
• The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the fourth quarter of 2025 was 64, up four points from the previous quarter, according to a January 2026 report by the National Association of Home Builders (NAHB). Any RMI reading over 50 indicates that most remodelers feel market conditions are good. In the fourth quarter, the Current Conditions Index portion of the RMI rose three points to 71 compared to Q3 2025. The Future Indicators Index component of the RMI increased by four points to 56. While aging US housing stock, strong homeowner equity, and the aging-in-place trend kept the RMI solidly in positive territory in Q4 2025, the NAHB noted that high building costs and waning consumer confidence continue to pose challenges to the remodeling industry.

• New single-family home sales fell 0.1% month-over-month but were up 18.7% year-over-year in October 2025, according to the US Census Bureau. The October new home sales data was delayed due to the 43-day government shutdown. October's total new home sales reached 737,000 units, following two previous months of gains. Some industry watchers suggest that while mortgage rates gradually inched lower throughout 2025, they are likely to remain elevated, Reuters reports. Mortgage rates closely track the benchmark 10-year Treasury yield, which is under upward pressure from the federal deficit and above-target inflation. There are emerging signals that labor-market concerns are weighing on new-home purchase demand.
• Home builder confidence in the single-family market dropped in January amid continued affordability concerns and high construction costs, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell two points to 37 in January 2026. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The high end of the single-family market is faring relatively well compared to the medium- and low-end, which are pressured by high home prices and mortgage rates. Down payments have become a particular sore spot among many potential buyers as home prices remain elevated. However, as of January 15, the average mortgage rate fell to 6.06%, marking the lowest rate in three years, according to Freddie Mac. The HMI survey also showed that 40% of builders reduced home prices in January, which marked the third consecutive month when the share of builders offering discounts was 40% or higher.