Just as a restaurant’s soup du jour varies based on the day’s ingredients, lumber prices vary daily based on a variety of factors. Which ingredients will influence the direction of lumber prices over the coming months? NAWLA suggests you keep track of these five fundamentals that, when combined, are sure to help determine the day’s price.
1) The Base Supply
Begin with the roughly 2.6 million square miles of forests that cover the United States and Canada—that’s 17% of all forested land in the world, and the main reason why we build houses with lumber rather than concrete, stone, or mud.
But while seemingly infinite, that supply can be affected by pests like the mountain pine beetle, which has destroyed nearly 70,000 square miles of forest in British Columbia alone. That’s a bigger area than the state of Florida. Events like hurricanes and blizzards also can affect what’s readily available, while human-caused events like railroad worker strikes can stop lumber from moving to markets.
Next come the mills. We’ve seen dramatic changes in softwood lumber production in recent years, with its subsequent impact on supply and thus prices. In general, Canada is producing less softwood lumber these days, and the U.S. more.
2) Market Demand
Mills and distributors might wish lumber prices were at a certain level, but those wishes are worthless without customer demand. That’s why everyone pays such close attention to homebuilding, existing home sales, and remodeling figures. Reports on permits, starts, and work under construction give mills, distributors, and dealers a sense of current and future demand, but you can still have surprises. Witness the surprising jump in demand during and immediately after COVID.
Note as well that the previous paragraph mentioned a “sense” of demand. That’s because certainty about prices is an elusive goal in the lumber world, even without duties and tariffs and other external factors (more on that below). For instance, lumber prices typically rise in February and March because it’s hard to tell how the weather and the spring buying season will affect demand. Since nobody knows for sure what conditions will be, buyers stock up just in case. That demand pushes prices up, sometimes by a lot. It’s only much later in the spring, after those uncertainties end, that people know whether they bought too much or too little. Often it’s too much, so buying slows and prices drop.
Having to operate in the dark also explains why the lumber futures market and price quoting services like Random Lengths are so important. The volume of lumber traded in futures contracts represents less than 0.2% of all the lumber that’s actually sold, and Random Lengths reports spot prices, not the prices agreed to in long-term contracts. But since the vast amount of deals are done privately, without others knowing for sure how big was the transaction, futures prices and Random Lengths prints (plus a few other services) are the only guideposts.
3) Builder/User Needs
There’s a manufactured home company that uses 2x3s for its trusses because the trusses don’t have to span as far as a typical home’s truss system, which is built with 2x4s. Because it wants 2x3s, that manufactured home maker needs to find a mill that will produce this special product.
This is an extreme example of a common issue: Builders have specific needs regarding the grade, length, dimension, and species of the lumber they buy. Differences in the supply and demand for those particular products figure mightily into how much they cost.
Sometimes those price differences will lead builders to change their tastes. That’s happening now with the growing use of Southern yellow pine for framing vs. Western SPF. Builders might prefer SPF, but SYP is so much cheaper they feel they need to make the switch. As a result, Southern yellow pine can be found today in communities far from their Dixie roots. Will it remain that way? That depends in part on whether the price gap stays wide.
4) External Pricing Factors
A stick of might not look like a football, but it sure gets treated that way by politicians. This fall, we’ve seen the Trump Administration announce a 10% tariff on imported lumber because it concluded that reliance on imports is a national security risk. Earlier in 2025, the federal government dramatically increased antidumping and countervailing duties on Canadian lumber on grounds that it was being sold at an unfairly low price.
But this political football gets tossed around in other capitals, too. Canada’s prime minister has announced a new “Buy Canadian” initiative that will both support Canadian industries financially as well as encourage internal buying. And you can argue that the stumpage rates Canadian province put on cutting lumber from Crown Lands are based at least in part on political considerations.
Add these factors to normal supply/demand issues and you get an even more turbulent pricing environment.
5) Competition
There are thousands of timber mills across North America. Ten companies account for nearly half of all the lumber and other products produced by those mills. With that many players, you can expect dog-eat-dog competition, particularly when you’re dealing with a commodity rather than a branded product.
The competition is just as strong on the distributor and retail level. Across the continent, smaller firms are going head-to-head up against the big box stores as well as against each other. With hundreds of lumberyard locations having changed hands in recent years, plus the arrival of new competitors in a market, the drive to win share often leads to discounting.
Then there’s the international angle. Chile and New Zealand have built a good-sized niche here selling millworker made from radiata pine. And countries like Sweden, Finland, Austria, and Germany are using their expertise with new products like cross-laminated timber to win business.
A Never-Ending Game
For some, trying to win at pricing is a headache-inducing endeavor. For others—particularly longtime dealers who have been buying for decades—it’s both the key way to make money at a lumberyard as well as an enjoyable way of life.
“People ask me, ‘Do you ever go to Las Vegas?’” a Midwestern lumberyard owner remarked to this author years ago. His answer? “I’m in Las Vegas every day.”
About the Author
Craig Webb is a nationally recognized expert in the lumber and building materials industry, known for his deep insights into dealer and distributor operations across the U.S. As President of Webb Analytics, he provides strategic consulting, custom research and industry analysis to help manufacturers, distributors and investors navigate market trends and challenges. With a journalism degree from Indiana University and decades of editorial leadership — including 12 years as editor-in-chief of ProSales magazine — Webb has built a reputation as a trusted voice through his writing, speaking engagements and creation of the ProSales 100 Conference. His career spans influential roles at The Wall Street Journal, McGraw-Hill, American Banker and UPI and he’s visited dealers in 49 states and multiple countries to stay closely connected to the industry’s pulse.