Reductions in Lumber Mill Capacity Reflect Shifting Housing Market

Prior to the COVID-19 pandemic, the housing market was expected to have another year of growth. A shortage of housing units (especially affordable ones catering to first-time home buyers), generally favorable economic conditions, and increasing numbers of younger consumers looking to move out of apartments and into their own homes made the nation’s homebuilders look favorably to 2020 as a year of sales and profit.

Enter coronavirus, and with it mass unemployment, social distancing, and, in some cases, construction shutdowns. A year that started out with so much promise has quickly turned into a time of retrenchment as building and construction firms across the US – despite their essential nature – have slowed or, in some cases, stopped work on existing projects altogether.

Bowing to this new market reality, many of North America’s leading engineered lumber producers have announced plans to cut back on production for the near term, reducing and in some cases ceasing outputs. While this is not expected to have an effect on supply in the short term due to the general slowdown in construction projects, it may have an effect later in the year. Shortages of such key construction materials as lumber, plywood, OSB, and particleboard will make it more difficult not only for homebuilders but for suppliers of such products as cabinets, millwork, decking, hardwood flooring, and furniture to quickly boost output to meet rising demand.

For more information about the US home building and construction industries, see The Freedonia Group’s coverage of the Building and Construction Industry. Freedonia Custom Research is also available for questions requiring tailored market intelligence.