North American Lumber: Production Outpaces Demand Amid Housing Headwinds

North America’s softwood lumber market looks likely to end 2025 no more settled than it was at the beginning. Producers and buyers alike continue navigating a landscape shaped by fluctuating demand, shifting trade patterns, and an uncertain housing outlook. 

An Oversupplied Market in a Cooling Economy 

Despite modest production declines in early 2025, the lumber market remains oversupplied. Mills across the US and Canada are contending with high inventories built up earlier in the year. Expectations of tariff hikes spurred an early rush of exports from Canada to the US, flooding the market while demand was soft. However, in the first half of 2025 softwood lumber exports from Canada to the US declined, while US imports from Europe in the first seven months of 2025 increased by 6% year-over-year. 

Housing Headwinds Continue 

Underlying these supply pressures is a US housing market stuck in the doldrums. August saw an 8.5% decline in overall housing starts, with single-family construction down nearly 7%. Builders continue to cite persistent land shortages—more than six in ten report a low or very low supply of available lots—and affordability remains constrained by lingering mortgage rate pressures. 

The US Federal Reserve’s September 17 rate cut—the first since early 2024—has nudged mortgage rates slightly downward, rekindling cautious optimism among homebuilders. If financing conditions continue to ease, it could lay the groundwork for a rebound in construction activity heading into 2026. 

Data-Driven Decisions in Uncertain Times 

In a sector where a few percentage points in production or pricing can reshape profitability, reliable market intelligence has never been more critical. Understanding the interplay between supply, trade, and housing demand is key for sawmills, wholesalers, and developers looking to position strategically for the months ahead. 

For a deeper look at the numbers, trends, and forward outlook shaping the softwood lumber industry, download our full Market Insights report, “North American Lumber Output Surpasses Demand Amid Housing Slowdown.”