The American lumber market could shrink by as much as 40 per cent over the next 45 years, with every forecast scenario now pointing downward once housing construction is given its true weight in the numbers. That is according to a rebuilt version of the Forest Resource Outlook Model (FOROM) published in Forest Policy and Economics by Craig Johnston, an independent researcher in Ottawa, working with Jinggang Guo of Louisiana State University and Jeffrey P Prestemon of the US Forest Service Southern Research Station.
The paper, titled Revisiting U.S. Softwood Lumber Demand Projections: The Central Role of Residential Construction in Forest Sector Outlooks, finds that new home construction now carries four times as much weight as broader economic growth in shaping American lumber demand. “Housing starts are the dominant driver,” the authors write.
Wood Central understands that the old model, which leaned heavily on GDP growth, had been predicting rising American lumber use after 2015, the opposite of what actually happened. In the rebuilt version, however, which puts housing starts at the centre, it tracks the real market far more accurately, with a slow decline since the 2008 financial crisis that steepens through to 2070.
American home-building has swung hard over the past 25 years, from a peak of 2.12 million housing starts in 2005 to a trough of just 526,000 in 2010. That volatility now feeds directly into the lumber forecast, and every scenario the researchers ran sits today’s market below.
The US South, long the engine of American lumber production, takes the deepest hit under the new projections. Combined demand across the South East and South Central regions falls from 29.4 million cubic metres in 2020 to around 20.2 million by 2050 under the steepest decline the model tests, a near-33 per cent contraction tied almost entirely to weakening home construction.
The Pacific Coast holds firmer ground, falling from 27.9 million cubic metres in 2020 to 19.6 million cubic metres by 2070, a 30 per cent drop that still sits well ahead of the Southern collapse. Single-family housing exposure and mortgage-rate sensitivity run deeper across the South, the researchers note, which is why demand there unwinds faster when construction slows.
Canadian mills carry the first pressure, with decades of exports built around southern US demand that now contracts through 2070 under every scenario the researchers tested. Canadian producers, along with Swedish and Finnish rivals, have already moved on to Chinese buyers left short by Russia’s Segezha Group, as Wood Central reported earlier this week.
Johnston, Guo and Prestemon found that American softwood lumber demand will likely stay below its 2024 level across all five forecast scenarios, with the steepest case pulling national demand to 60 million cubic metres by 2070 — 40 per cent below the 2000 to 2024 average of 84.3 million cubic metres.
