Lumber Prices Plunge 24% as Housing Slows and Tariff Uncertainty Persists

Lumber prices have collapsed in recent weeks, slipping 24 percent since the start of August to about $526.50 per thousand board feet, a move industry participants and analysts say signals mounting stress in the U.S. housing and construction sectors.

The drop reflects a sharp fall in demand for wood as new home building slows, consumers delay home-improvement projects and buyers wrestle with uncertainty over tariffs on imported lumber. Two of North America’s largest sawmills have announced plans to cut output to help arrest the price decline, according to a report in the Wall Street Journal.

Canadian softwood, which accounts for roughly 24 percent of U.S. consumption, remains subject to a 35 percent duty, and traders say tariff policy has become a dominant factor in buying decisions. The White House has said it is contemplating further tariffs on imported wood, and past threats of higher duties have led U.S. wholesalers and builders to stockpile inventory, distorting normal supply-and-demand signals.

"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, describing why he has limited purchases to short-term needs. "It was 50/50 either way. So, I sat on my hands."

The downturn in lumber prices is coinciding with weakening construction activity. U.S. construction spending fell 3.4 percent in July from a record set in May 2024, and residential building permits dropped to 1.4 million units in July, the lowest level since June 2020. Those trends have reduced demand for framing lumber and other construction-grade wood products.

Market participants say the recent price collapse followed a period of elevated buying and stockpiling earlier this year, when threats of higher duties prompted importers to build inventories. Prices climbed as supply tightened, but they plunged after some of the more severe tariff threats were scaled back, leaving inventories high and current demand muted.

Sawmill operators are responding by trimming production. Two of the largest operators in North America notified the market that they would scale back output to help stabilize prices, the Wall Street Journal reported. Traders say buyers are now paying as much attention to tariff schedules and duty costs as to the raw price of lumber itself.

The weakening housing market has produced other signs of strain. Across the national housing market, de-listings — properties removed from sale without a sale — rose 57 percent in July compared with the same month last year, according to Realtor.com. Miami, in particular, recorded an unusually high rate of de-listings, with 57 removals per 100 new listings in July.

Federal Reserve Chair Jerome Powell has indicated a cut to the central bank’s benchmark interest rate is likely later this month, a move that could lower mortgage rates and provide some support to homebuying and renovation activity. Lower borrowing costs generally encourage buyers to move, refinance or take on home-improvement loans, which could bolster lumber demand if sustained.

For now, however, the combination of slowing construction, subdued consumer spending on renovations and the persistent threat of trade measures has pushed lumber prices sharply lower, raising fresh concerns among economists and industry executives about the near-term trajectory of the housing sector and its spillovers to broader economic growth.