Don’t worry too much…all businesses experience ups and downs. Looking ahead to 2025 the lumber marketing is bright and shinny.
Will you be prepared for an increase in demand?

Market Outlook for 2025

The overall outlook for the hardwood lumber market in 2025 appears optimistic, with several positive indicators:

Housing and Construction

- Housing starts are projected to increase to 1.5-1.6 million units in 2025, up from around 1.4 million in 2024[1].

- Single-family home construction is expected to rise due to demographic trends and a shift away from multi-family builds[2].

- US residential construction is forecast to consume nearly 19 billion board feet (BBF) of softwood lumber in 2024, with another 10.2% rise expected in 2025[1].

Lumber Demand and Prices

- Lumber demand is projected to grow at a faster rate than capacity in 2025[1].

- Lumber prices are expected to see an 18% surge in 2025 as end-use markets experience growth[1].

- FEA forecasts a 4.4% rise in demand for Canadian and US mills in 2025[1].

Industry Sentiment

- Over 60% of respondents in the National Wood Flooring Association (NWFA) Industry Outlook survey expect sales to increase in 2025[4].

- About 70% of manufacturers anticipate growth in wood flooring sales for 2025, with only 7% expecting a moderate decline[4].

Key Factors Influencing the 2025 Outlook

1. **Interest Rates:** Expectations of declining interest rates in 2024-2025 could boost construction and timber demand[3].

2. **Economic Recovery:** The anticipated economic improvement is likely to increase homebuyers' spending power[1].

3. **Renovation Market:** Home renovation spending is forecast to remain above trend, supporting hardwood demand[2].

4. **Raw Material Costs:** About half of manufacturers expect raw material costs to continue increasing in 2025, particularly for white oak[4].

5. **Technology Adoption:** Nearly 70% of manufacturers have adopted automation and other technologies to stay competitive, which could impact production and pricing[4].

6. **Regional Differences:** The US South is expected to continue expanding capacity, while other regions like the US West and British Columbia may see mill closures[1].

While the overall forecast for 2025 is positive, it's important to note that market conditions can be influenced by various factors, including global economic conditions, geopolitical events, and unforeseen circumstances. The industry appears to be balancing optimism with caution as it looks towards 2025.

Citations:

[1] https://www.farmcrediteast.com/en/resources/Industry-Trends-and-Outlooks/Reports/2403KEPForestProductsOutlook2024

[2] https://www.farmcrediteast.com/en/resources/todays-harvest-Blog/240426ForestProductsOutlookSummary

[3] https://www.timber.exchange/blog-details/the-global-lumber-market-outlook-to-2025

[4] https://hardwoodfloorsmag.com/2024/10/01/industry-outlook-2025-balancing-uncertainty-with-optimism/