The North American lumber market closed out 2025 at a crossroads. After prolonged pressure from high interest rates, affordability challenges, and uneven construction activity, early signals suggest the market may be approaching a turning point. At the same time, structural changes on the supply side are reshaping how quickly—and how strongly—the industry can respond to any rebound in demand. As 2026 begins, lumber market fundamentals point to a year where balance will be hard to maintain and volatility may return.
Demand trends in 2025 painted a mixed picture. Housing activity remained subdued for much of the year as elevated mortgage rates and affordability challenges weighed on buyers and builders alike. However, toward year-end, confidence began to improve. Mortgage rates eased, builders’ expectations strengthened, and forecasts for existing home sales in 2026 turned more optimistic.
What stands out is the growing disconnect between demand potential and supply readiness. Even a modest improvement in construction activity could collide with an industry operating with less spare capacity than in past cycles. This dynamic raises the risk of tighter markets and upward price pressure during key seasonal periods—particularly if demand accelerates faster than supply can respond.
One of the most significant developments over the past year has been the tightening of lumber supply across North America. While US production showed modest improvement, Canadian output declined, with British Columbia seeing particularly sharp reductions. A combination of mill closures, curtailments, high operating costs, and limited access to affordable fiber has permanently altered the supply landscape.
These constraints matter because the US market remains structurally dependent on imports. Domestic producers are not positioned to quickly replace lost volumes, especially during periods of rising demand. As a result, the market’s margin for error has narrowed—making it more sensitive to seasonal shifts, weather disruptions, and policy decisions.
As the lumber market moves into 2026, the interplay between constrained supply and tentative demand recovery will be critical to watch. Producers, buyers, and investors alike will need to navigate an environment shaped as much by structural limitations as by economic signals.
If you’d like to learn more, download our latest Market Insights report, “North American Lumber Demand Rises Amid Supply Constraints,” by Audrey Dixon, Managing Editor/Writer, ResourceWise Forest Products, for a deeper look at North America’s lumber market and the forces shaping pricing, supply, and demand in the year ahead.