Lumber prices remain stubbornly elevated due to a combination of trade tariffs on Canadian imports, tight domestic supply, and steady demand from homebuilding. While prices have come down from their pandemic-era peaks, they sit well above pre-2020 levels, and several structural forces are keeping them there.
Canadian Tariffs Add Hundreds Per Load
Canada supplies a massive share of the softwood lumber consumed in the United States, and that lumber gets hit with countervailing duties before it crosses the border. The U.S. Department of Commerce sets these rates through periodic reviews, and the most recent final results show duties ranging from about 3.9% to 9.6% depending on the producer. Most Canadian companies that aren’t individually reviewed face a default rate of 6.74%. These duties are meant to offset government subsidies that Canadian producers receive, but the practical effect is a direct increase in the cost of every board that enters the U.S. market.
On top of countervailing duties, anti-dumping duties apply as well, pushing total combined rates even higher. Industry analysts at Fastmarkets describe the current tariff levels as “dramatically higher” than in previous years, and the impact has been severe for Canadian mills. Most Canadian sawmills are now cash-negative, with prices at the mill gate falling below $500 per thousand board feet. That sounds like it should mean cheaper lumber for American buyers, but the duties erase that advantage and then some. When producers lose money, they cut production, which tightens supply further.
Supply Is Shrinking on Both Sides of the Border
Canadian mills have been shutting down or reducing shifts in response to unprofitable conditions. This capacity rationalization, as the industry calls it, means fewer boards being produced overall. When tariffs make it difficult for foreign producers to compete, you’d expect domestic producers to fill the gap. But U.S. sawmill capacity hasn’t expanded fast enough to absorb the difference, partly because building a new mill takes years and partly because producers remain cautious after the extreme price swings of 2020 through 2022.
Wholesale lumber inventories in the U.S. tell an interesting story. As of late 2025, adjusted wholesale lumber inventories sat at roughly $31 billion, essentially flat compared to the prior year (down just 0.3%). The inventories-to-sales ratio for lumber wholesalers hovered around 1.73 to 1.78, meaning distributors are carrying roughly 21 to 22 months of supply relative to their sales pace. That ratio has tightened slightly, suggesting that supply isn’t building up the way it would if demand were truly soft. Wholesalers aren’t stockpiling, which means there’s no cushion to absorb a sudden jump in demand.
Homebuilding Keeps Demand Firm
A single-family home in the U.S. uses roughly 15,000 board feet of lumber on average, and the country is still building over a million homes a year. An estimated 1,358,700 housing units were started in 2025, only marginally below the 2024 figure of 1,367,100. Single-family starts, which consume the most wood per unit, ran at an annual pace near 981,000 by the end of the year.
These numbers aren’t booming, but they represent consistent, large-scale demand. The U.S. has been dealing with a housing shortage for years, driven by underbuilding during the 2010s, population growth, and household formation among millennials. Even with elevated mortgage rates slowing some buyers, builders have continued starting new projects, particularly in the South and Mountain West. Every one of those homes needs framing lumber, sheathing, and engineered wood products. That baseline consumption keeps a floor under prices even during slower stretches.
Natural Disasters and Mill Constraints
Beyond trade policy and housing math, the timber supply itself has been under pressure. Years of wildfires across British Columbia and the western United States have destroyed millions of acres of harvestable forest. Beetle infestations have compounded the damage, killing standing timber before it can be logged. These aren’t short-term disruptions. A forest that burns today won’t produce commercial timber for decades.
Transportation costs also play a role. Lumber is heavy and bulky relative to its value, which means freight expenses eat into margins and show up in the final price. Diesel costs, rail capacity bottlenecks, and driver shortages have all pushed logistics expenses higher compared to pre-pandemic norms. A mill in the interior of British Columbia or the U.S. Southeast may produce boards at a reasonable cost, but getting them to a lumberyard in Denver or Chicago adds meaningfully to the sticker price.
What Analysts Expect Going Forward
Industry forecasters see prices for most wood products rising modestly in 2026, driven by the combination of reduced production capacity and a slight rebound in demand. Softwood lumber is expected to be the most volatile category because of the tariff situation and ongoing supply adjustments among Canadian producers. Plywood prices have limited room to climb because oriented strand board (a cheaper alternative) keeps competition tight. Particleboard and medium-density fiberboard prices are likely to hold roughly steady since those products are used later in the construction process, during cabinetry and finishing, so any uptick in new construction takes longer to reach them.
The core dynamic is straightforward: tariffs are discouraging Canadian production, domestic capacity hasn’t filled the gap, and the country still needs more housing than it’s building. Until one of those factors shifts meaningfully, whether through a trade agreement, a surge in U.S. mill investment, or a sharp housing slowdown, lumber prices are likely to stay above what most people remember as normal.