Lumber prices crash 24% as tariff uncertainty and a cooling housing market signal wider economic strain

Lumber prices have plunged 24% since the start of August, falling to $526.50 per thousand board feet, a drop industry analysts and traders say is an early warning sign of weakness in the U.S. housing market and the broader economy.

The decline reflects a mix of collapsing demand for new-construction lumber, heightened uncertainty tied to tariff actions by the White House and lingering effects of earlier stockpiling. Two of North America’s largest sawmills have said they will reduce output to try to slow the price slide, according to a Wall Street Journal report.

Demand for wood for new construction and renovation projects has weakened as new-home developments slow and consumers defer home-improvement work, contributing to the price fall. The downturn has occurred amid a policy backdrop in which Canadian softwood—which accounts for roughly 24% of U.S. consumption—is subject to a 35% duty and the White House has said it is considering further tariffs on imported wood.

Industry participants say tariff uncertainty has repeatedly distorted buying patterns. A large volume of lumber was stockpiled in the United States after President Donald Trump threatened steeper duties on Canadian and other imports, which had pushed prices up earlier in the year. Traders and buyers then pulled back after the administration scaled back the most severe of its threats, helping to send prices lower.

"I was going to lose money because tariffs happen, or I was going to lose money because there were no tariffs," said Stinson Dean, who buys wood for a building materials factory. "It was 50/50 either way. So I sat on my hands," he said, adding he now purchases only what he needs amid continuing uncertainty.

The slide in lumber is occurring against broader signs of cooling in the housing sector. U.S. construction spending was down 3.4% in July from a record set in May 2024, and residential building permits fell to 1.4 million units in July, the fewest since June 2020. Real-estate listings also show growing hesitancy: nationally, de-listings rose 57% in July from a year earlier, with Miami reporting 57 de-listings per 100 new listings in July.

Market participants said the mix of weak end-user demand and tariff-driven trade flows has left traders focusing on duty schedules and availability as much as on spot prices. Some buyers say the effective cost of imported lumber is now driven more by the risk of sudden tariff changes than by conventional supply-and-demand drivers.

Those dynamics have prompted at least two major sawmills to announce reduced production to help shore up prices, an unusual step that reflects the speed of the recent drop. Sawmills and distributors said they hope output cuts will rebalance inventories and ease downward pressure on prices.

Federal Reserve Chair Jerome Powell has signaled that a cut to the benchmark interest rate could come later this month. Lower policy rates would likely help mortgage rates and could provide some support to housing demand by making financing for purchases, refinances and home-improvement loans less expensive. Economists cautioned, however, that rate relief may take time to feed through into renewed building activity and would not immediately reverse stockpiled inventories or tariff-driven dislocations.

Analysts said the lumber price move is consistent with historical patterns in which falling wood costs presage softer activity in residential construction and, by extension, broader economic growth. With production adjustments already under way and trade-policy uncertainty unresolved, market watchers said further volatility in lumber and construction-related sectors is likely in the near term.