Hardware Retailing The Industry's Source for Insights and Information
In an analysis of the Federal Reserve G.17 Industrial Product report, the National Association of Home Builders (NAHB) found that sawmill production has remained essentially flat over the past two years, according to the report.
According to NAHB, the sawmill utilization rate is a ratio of actual production and potential full production that is released quarterly by the Census Bureau. The utilization rate has been on a downward trend since 2017 because of added capacity with stagnant production. In Q2 2025, the rate had a slight uptick from 66.5% to 68.1%. Meanwhile, sawmill production, based on a four-quarter moving average, is 0.9% higher in the second quarter of 2025 compared to the first quarter. However, sawmill production remains just 0.3% above 2023 levels.
In the previous two years, especially in 2024, lumber prices experienced declines as supply outpaced demand. Lower prices have led to sawmill curtailments and closures with excess lumber capacity, which may be why the capacity index started to show declines in early 2025, according to NAHB.
Looking ahead, lumber production and pricing in 2026 remains highly uncertain. The latest lumber prices in December continue to remain low, despite combined duties of nearly 45% on U.S. imports of softwood lumber from Canada. Waning housing production over the course of 2025 created an environment where lumber supply was continually above demand, especially over the second half of the year. Next year, depending on residential construction, lumber prices may enter a period of volatility. Mills across North America have been producing at a loss for much of 2025, creating conditions where closures and curtailments potentially lead to a lower supply of lumber next year.
