2026 Lumber Pricing Forecast: A Tale of Two Markets

TL;DR – Quick Summary

US Market: Spring 2026 = buying opportunity. Lumber prices soft (~$530/MBF) through April, then rising 6-8% by year-end. Action: Lock pricing Feb-April before recovery. Caution: Hardware shortages expected—order immediately.

Canadian Market: Crisis mode. Expect 25-35% price increases by mid-2026. 22 mills closed permanently, more closing. Canadian dollar falling to C$1.45-1.50. Action: Secure materials NOW (December/January) or face severe shortages and cost overruns.

Bottom Line:

• US buyers: Wait for spring, act fast on hardware
• Canadian buyers: Act immediately or postpone to 2027

---

The Great Divide: US vs. Canada

As we look ahead to 2026, the lumber industry faces an unprecedented divergence between the United States and Canadian markets. While historical economic patterns typically see both markets move in tandem, current trade policies and economic conditions have created two distinctly different trajectories that builders, homeowners, and contractors need to understand for the year ahead.

The United States: Spring Opportunity Window

The US housing market continues its measured slowdown into 2026. After housing starts totaled 1.36 million units in 2024 (down 3.9% from 2023), forecasts predict further modest declines of approximately 4% through 2026, bringing total starts to between 1.2 and 1.3 million units.

This cooling construction activity is creating favorable conditions for lumber pricing in the first half of 2026. Current lumber futures hover around $530 per thousand board feet as of late 2025—near their lowest levels since September—and industry analysts expect prices to remain soft through spring 2026 before beginning a gradual recovery in the second half of the year.

Historical Patterns Hold True

When housing slows, lumber prices typically follow—and this cycle appears to be no exception. The free market economy of the United States is functioning as expected, with supply and demand finding their natural equilibrium. Mills and distributors continue to work through elevated inventories carried over from 2025, when buyers front-loaded purchases in anticipation of tariff policies.

The Spring Sweet Spot

For anyone planning a home build or backyard project in the United States, the message is clear: spring 2026 presents an optimal window for lumber purchases. Industry forecasts suggest the Framing Lumber Composite Index will begin recovering in the second half of 2026, with prices potentially rising 6-8% by year-end as demand from an improving housing market starts to match available supply.

The strategic play: Quote projects now, lock pricing in late winter or early spring, and begin construction before the anticipated Q2-Q3 price recovery.

However, there’s an important caveat to this favorable pricing outlook. While framing lumber should remain accessible and competitively priced through spring, be prepared for complications elsewhere. Some specialty sizes and products may face availability issues as mills remain cautious about overproducing the market. More significantly, hardware and fasteners—particularly imported items—could see shortages and elevated prices due to ongoing tariff policies affecting goods from multiple countries.

The Q2 Wildcard

One major uncertainty looms over the 2026 forecast: potential tariff scenarios. Industry analyst Russ Taylor forecasts that if current US trade restrictions on Canadian lumber persist, prices could spike sharply as early as Q2 2026. The mechanism is straightforward: the United States aims to reduce Canada’s share of the US lumber market from approximately 23% to single digits, but domestic production capacity cannot fill this gap quickly. When demand rises seasonally, restricted imports will create supply shortages and drive prices up significantly.

Under a sustained tariff scenario, lumber prices could jump 21% or more during 2026. However, most analysts believe the more likely outcome involves tariff modifications or negotiations that prevent such dramatic price spikes.

Canada: Navigating the Perfect Storm

The Canadian lumber market enters 2026 facing what industry insiders describe as a “perfect storm” of challenges that will fundamentally reshape pricing and availability throughout the year.

Tariff Devastation Continues

Canadian lumber exports to the US face combined duties of 45.6% as we enter 2026—an existential burden for an industry where the United States historically accounted for over 90% of export volume. These aren’t temporary trade frictions; they represent fundamental market restructuring.

The human cost continues to mount. Since 2022, 22 sawmills have closed permanently and more than 50 have reduced operations, directly affecting over 5,600 workers. Major producers including West Fraser, Domtar, and Interfor announced additional facility closures and indefinite curtailments throughout late 2025, with more expected in early 2026.

Housing Starts Remain Depressed

Canadian housing starts provide no relief on the demand side. After hitting 30-year lows through 2025, forecasts for 2026 show continued weakness. The Greater Toronto Area and broader Golden Horseshoe region saw housing starts decline by more than one-third through 2025, with condo starts particularly devastated—down more than 50% from recent peaks.

This domestic demand collapse means Canadian mills face the double squeeze of losing their primary export market while their home market withers. The math is brutal: even if Canadian housing starts doubled—which would require massive policy changes and investment unlikely to materialize—it wouldn’t replace lost US export volumes.

Supply Constraints Deepen

Even without tariffs, Canadian mills face worsening timber access challenges. British Columbia’s allowable annual cut has fallen by one-third over 20 years due to timberland setasides, Indigenous rights settlements, insect infestations, and wildfire losses. Harvest levels have dropped by approximately half, raising log costs and rendering many older sawmills economically unviable.

British Columbia alone lost 1.4 million hectares of forest to wildfires in 2023, creating supply constraints that will affect production capacity for years to come. Canadian lumber production was down 6.9% in 2025 and further reductions appear inevitable in 2026.

Government Support and Its Cost

The Canadian government’s emergency support measures provide near-term relief but come with long-term implications. The $700 million BDC Softwood Lumber Guarantee Program received an additional $500 million top-up to sustain operations into 2026, supplemented by another $500 million from the Large Enterprise Tariff Loan Facility.

Additionally, Prime Minister Mark Carney’s $5 billion strategic fund announced in late 2025 aims to bolster Canadian industries including lumber through “Buy Canada” initiatives prioritizing domestic materials in government projects.

While these programs offer critical liquidity, they’re structured as loans requiring repayment. Companies must eventually recover these costs through higher prices—a mathematical certainty that will flow through to lumber pricing in 2026 and beyond.

Currency Deterioration

The Canadian dollar has weakened significantly heading into 2026, with analysts projecting further deterioration to between C$1.45 and C$1.50 against the US dollar by year-end 2026. Some scenarios suggest the loonie could test even lower levels.

For Canadian consumers and builders, this currency weakness creates a vicious cycle. While theoretically helping export competitiveness, the 45%+ tariff barrier overwhelms any exchange rate benefit for US-bound lumber. More critically, the falling dollar makes all imported goods—including hardware, specialty lumber products, and materials not produced domestically—substantially more expensive.

Inflation Pressures Mount

Canada faces mounting inflation pressures from multiple sources converging in 2026. Government monetary expansion to support struggling sectors, currency depreciation, supply constraints across multiple industries, and rising costs throughout the economy create conditions ripe for significant inflation.

Canadian consumers already face severe housing cost pressures, with estimates indicating Canadians now spend 35 to 50 percent of their income on housing and utilities. Rising lumber and construction costs will only exacerbate this affordability crisis.

The 2026 Canadian Forecast: Significant Price Increases

For Canadian builders and homeowners, the outlook for 2026 is challenging. Expect lumber prices to increase 25% or more by mid-2026, with the potential for even sharper spikes if supply disruptions exceed current projections.

This isn’t speculation—it’s the mathematical result of combining:

• Permanently reduced domestic mill capacity with ongoing closures
• Collapsed housing starts eliminating economy-of-scale benefits
• Government loans requiring repayment through higher prices
• Currency depreciation making imported alternatives 30-40% more expensive
• Broad-based inflationary pressures across the Canadian economy
• Structural timber supply constraints limiting production recovery

The supply situation may prove even more challenging than pricing. With mills closing and curtailing production, certain products and sizes may simply be unavailable when needed. This creates a double bind: materials will cost significantly more, and project timelines could extend substantially due to supply disruptions.

Strategic Considerations for Canadian Projects

If you’re planning construction in Canada for 2026, consider these strategies:

Act Immediately on Supply: If you have a project planned for 2026, secure lumber commitments now—in December 2025 or January 2026 at the latest. Every month of delay likely means higher prices and reduced availability.

Budget Aggressively: Add 35-50% contingency to your lumber budget for projects starting after Q1 2026. This isn’t pessimism; it’s prudent planning given the structural challenges.

Explore Alternatives: Engineered wood products, steel framing for certain applications, or even postponing non-essential projects may make economic sense given market conditions.

Design for Flexibility: Specifications should accommodate alternative species, grades, or sizes. Insisting on specific materials could mean indefinite delays or project cancellation.

Consider Phased Construction: Build essential structures now and defer finishing work or additions to later years when market conditions may improve.

Historical Context and What Makes 2026 Different

Understanding historical lumber price cycles provides perspective but also highlights why 2026 presents unique challenges.

During the 2008 financial crisis, US lumber prices collapsed as housing construction ground to a halt—falling from over $350 per thousand board feet in 2006 to below $175 by 2009, a decline exceeding 50%. That cycle followed predictable patterns: housing demand disappeared, lumber demand followed, prices crashed.

The current US situation shows similar dynamics, though less extreme. Housing starts are declining but remain above crisis levels, and lumber prices are softening but not collapsing. This suggests a managed slowdown rather than a crash.

However, the Canadian situation has no close historical parallel. The combination of 45%+ tariffs, permanent mill closures, currency depreciation exceeding 30%, structural timber supply constraints, and simultaneous domestic demand collapse represents a unique confluence of negative factors.

The 2001-2002 softwood lumber dispute saw Canadian mills under pressure, but nothing approaching current tariff levels or the combination of domestic and international market challenges. The COVID-era price spike of 2021, when lumber briefly exceeded $1,600 per thousand board feet, was driven by demand surge meeting supply chain disruptions—temporary factors that eventually normalized. The current Canadian constraints are structural and long-term.

Looking Beyond 2026

For the US market, the path to normalization extends through 2026 and into 2027. Forest Economic Advisors forecasts housing starts will stabilize in 2026 before rising to 1.50 million units in 2027. This gradual recovery should support moderate lumber price increases in the 6-8% range annually—enough to incentivize production but not enough to dramatically impact project economics.

The wildcard remains tariff policy. If sustained restrictions remain in place through 2026, expect price volatility and potential supply shortages during peak construction season. If negotiations produce tariff relief by mid-2026, expect more stable pricing and better availability.

For Canada, the path forward remains uncertain through 2026 and beyond. Diversification to Asian and European markets faces significant hurdles. Canadian lumber is manufactured to North American grades and sizes, while many overseas markets use different specifications. Retooling for different markets requires years of investment and relationship building.

The domestic Canadian market cannot absorb the volume previously exported to the United States. Even optimistic projections for housing recovery wouldn’t replace those export volumes. This means many mills that have curtailed production may never restart, and closures announced as “temporary” may become permanent.

Some capacity has shifted to the US South, where major Canadian producers built facilities to access better fiber supplies and avoid tariffs. This trend will likely accelerate through 2026, but it represents permanent loss of Canadian capacity rather than a solution for Canadian builders and homeowners.

2026 Recommendations by Market

For US Builders and Homeowners:

• Begin project planning now for spring 2026 construction
• Lock lumber pricing in February-April 2026 for best rates
• Expect prices to rise 6-8% in second half of 2026
• Order specialty materials and hardware well in advance
• Build 2-3 week buffer into schedules for potential supply delays
• Consider bulk purchases if storage is available
• Remain flexible on species and grade selection

For Canadian Builders and Homeowners:

• Secure material commitments immediately for any 2026 project
• Budget for 25-35% price increases by mid-2026, possibly higher
• For projects starting after Q2, include price escalation clauses
• Establish relationships with multiple suppliers
• Consider postponing non-essential projects to 2027 or beyond
• Explore alternative building methods where feasible
• Monitor government construction incentive programs
• Accept that some projects may not be economically viable at 2026 pricing

The Bottom Line

The tale of two markets has rarely been more dramatic as we enter 2026. US builders can find opportunities in soft spring pricing before a gradual recovery begins in the second half of the year. Success requires strategic timing and awareness of potential tariff-related volatility.

Canadian builders and homeowners face a fundamentally challenged market requiring aggressive planning, budget flexibility, and realistic expectations about both pricing and availability. The structural nature of Canada’s lumber industry challenges means 2026 will be a difficult year, with limited prospects for meaningful improvement until broader trade and economic conditions change.

Understanding these divergent paths is essential for anyone planning construction projects in 2026. The professionals and homeowners who adapt their strategies to these new realities—acting decisively in the US spring market or securing Canadian supply immediately—will be best positioned to successfully complete their projects.

Market conditions can change rapidly. These projections are based on current data and announced policies as of December 2025. Readers should monitor economic indicators, tariff developments, and policy changes for their specific region throughout 2026.