Institutional investors have kept buying US timberland at close to one million acres a year through a soft patch for lumber, a wager that the long-delayed recovery in US housing construction is finally drawing near. That is according to Bank of America’s Specialty Asset Management 2026 Insights, a research report that maps the year ahead for commercial real estate, farmland, timberland and energy markets.
That conviction is anchored in a three-year run of heavy dealmaking from 2023 to 2025, and the report expects a comparable pace to hold through 2026. Prospective transactions are already underway across the Pacific Northwest and the Southeast, it said.
Regional concentration has been the defining feature of that activity, and the US South commanded the deal map through 2025. More than 560,000 acres changed hands across the South, some 56 per cent of national volume, whilst the North and West regions each accounted for a further 22 per cent.
Timberland Investment Management Organisations accounted for the bulk of the buying, taking 55 per cent of all acres acquired in 2025 against just 15 per cent of acres sold. That gap points to managers adding to forest holdings rather than cashing out, even as appreciation returns ease from the highs of recent years.
Those returns had been running hot, with US timberland delivering robust appreciation since 2021 on the back of a strong job market and supportive fiscal policy. National Council of Real Estate Investment Fiduciaries data cited in the report shows the pace cooled through 2025 after four consecutive years of substantial land value growth, with income returns softening as construction activity eased.
The investor optimism runs some way ahead of the homebuilders’ own reading, however, with the National Association of Home Builders forecasting housing starts will be flat to slightly down in 2026 before rising modestly in 2027. Bank of America takes the more bullish line, expecting demand for timber products to strengthen as inflation moderates and interest rates ease.
The longer arc, as reported, is decisively positive, with the mixed conditions of the past year doing little to dent timberland’s intrinsic appeal. “The long-term outlook for investment in US timberland is increasingly constructive,” the report said, citing biological growth and land appreciation as the forces that preserve value through cyclical swings.
Production momentum has shifted firmly towards the US South, where sustained sawmill and bioenergy investment continues to draw substantial capital. Lower labour costs, comparatively low land costs, and longer growing and harvesting seasons reinforce what the report ranks as “one of North America’s most attractive timber markets.”
The pulp side has firmed alongside sawtimber, as renewable energy programmes raise demand for wood pellets even as newsprint and traditional paper output decline. US wood pellet exports rose two per cent year on year through July, whilst Canadian shipments climbed 10 per cent through August, bound mainly for the UK and Japan respectively.
A sharper divide has opened across the border, with Canadian housing starts rising over the year as more favourable financing conditions took hold. US starts went the other way, and the resulting slide in residential activity fed what the report describes as a slight downward adjustment in lumber prices, with combined single-family and multifamily starts down 0.7 per cent on the year.
Selling has become more tactical as well, with managers increasingly willing to release partial tracts or whole assets to lock in value gains rather than holding indefinitely. The report describes an “active, opportunistic stance” on land sales over a passive “hold-forever” strategy, and notes that partial-sale assumptions are now written directly into deal underwriting.
The sector enters 2026 on what the report calls “a strong and active investment opportunity framework,” and the housing-led demand case rests on lower borrowing costs feeding back into residential construction. Disciplined market monitoring and proactive asset management, it concludes, will stay essential for investors chasing the next round of opportunities.
