Global lumber markets are facing renewed pressure as trade tensions, weak construction activity, high financing costs and rising logistics expenses continue to disrupt supply and demand balances. In the U.S. futures market, lumber prices fell to $566 per 1,000 board feet, marking the lowest level since March 2026.
The decline reflects ongoing uncertainty in the market, particularly following the U.S. decision to impose preliminary anti-dumping and countervailing duties on Canadian softwood lumber. When combined with the existing 10% duty, effective duties on Canadian lumber imports are expected to reach approximately 35.9% once they come into force in August.
Despite these measures aimed at supporting U.S. lumber producers, capacity utilization at U.S. sawmills remains low, at around 64%, according to market analysts at Tradingeconomics. At the same time, elevated construction costs and high interest rates are continuing to weigh on construction activity in both North America and Europe. Confidence among U.S. construction companies has fallen to its lowest level since September 2025.
High mortgage rates and rising property prices have significantly slowed new housing construction. This slowdown has also contributed to an oversupply of seasonal goods among lumber dealers. As a result, regional suppliers have been forced to offer steep discounts in order to reduce inventory during a period of unusually weak construction demand.
The stronger U.S. dollar has added another layer of pressure by making domestic production more expensive and reducing export competitiveness. Meanwhile, the escalating conflict in the Middle East and rising energy prices remain key risks for the building materials inflation outlook.
Sawmill Closures and Rising Transport Costs Add Pressure
On the supply side, sawmill closures in the U.S. and Canada, together with increased tariffs on Canadian lumber imports, are expected to remove more than 1.3 billion board feet of lumber from the North American market, according to Tradingeconomics analysts.
However, geopolitical tensions in the Middle East are also clouding the longer-term outlook. Higher energy prices are driving up transportation and shipping costs for lumber worldwide, increasing pressure across the supply chain.
In theory, these developments point toward a tighter supply environment, which could partly offset the negative impact of high mortgage rates. Yet regional inventories in North America remain elevated. While production cuts continue in British Columbia, severe storms in the southern United States have slowed or halted construction site activity. This has created a surplus among lumber dealers, forcing many to reduce prices aggressively.
Tariffs on softwood lumber introduced by the Trump administration were intended to support prices, but they have also contributed to weaker demand by increasing the average cost of home construction. This has further damaged homebuilder confidence at a time when stronger demand would be needed to reduce existing inventories.
Adding to the challenge, 30-year fixed mortgage rates rose to 6.22% after the Federal Reserve left key interest rates unchanged.
The market also continues to be affected by a sharp increase in crude oil prices, which is pushing up energy-intensive transportation and production costs. These combined pressures are forcing homebuilders to reduce prices as they try to manage rising levels of unsold inventory.
