Income Rises, CRE Stress: Why Lumber Prices Remain Stable

Impact on Your Procurement Strategy

The macro signals entering Q4 2025 are fundamentally mixed, suggesting that the dimensional lumber market (SPF, SYP, Hem-Fir) will likely remain in a state of seasonal stability, absent any major supply shock. The primary positive driver is the resilient US consumer. The US personal income rose 0.4% and personal consumption expenditures (PCE) increased 0.3% in September. This continuous income growth fuels R&R activity, which is crucial for maintaining demand for 2x4 and 2x6 commodity grades during the traditionally slower winter months. For procurement managers, this means the floor price is likely sticky. Despite seasonal slowdowns, strong R&R demand prevents prices from collapsing, especially considering the Core PCE price index remains elevated at 2.8% year-over-year, keeping upward pressure on mill operating and logistics costs.

Conversely, the outlook for new construction, particularly multifamily, introduces caution. It highlights that commercial mortgage delinquency rates were mixed in Q3, increasing for CMBS and GSE loans—two major funding sources for development. While property values have stabilized, the stress associated with higher vacancy rates and slower rent growth means that capital for new multifamily and commercial projects is constrained. This directly impacts the demand for specialty lumber, studs, and larger dimension material used in mid-rise construction across major metro areas. Distributors heavily reliant on this sector should exercise restraint, as project timelines may lengthen or face cancellation, leading to potential inventory overhangs.

The Canadian employment report shows stability in the supply region, with employment rising by 67,000 jobs in October and unemployment falling to 6.9%. While this is a positive indicator for the health of Canadian manufacturing and logistics, it doesn't change the US demand equation. The market is currently driven by a tug-of-war: resilient R&R demand pulling volume, versus high interest rates and commercial real estate stress pushing new construction volume lower.

Timing Consideration: Given this stability, buyers should avoid aggressive positioning. Focus on securing rolling volumes (4-6 weeks out) for the R&R segment (e.g., #2 & Better 2x4s and 2x6s) to meet steady demand. Delay large speculative purchases of studs or high-volume dimension material until early Q1 2026. The true test for the market will come when Q4 housing starts data is released and interest rate movement is clarified in the new year. Procurement managers should prioritize risk management over price chasing in the current environment.

Key Takeaways

• Focus inventory on R&R grades (2x4, 2x6) supported by the 0.4% rise in US personal income, budgeting for sticky costs due to 2.8% Core PCE inflation.

• Exercise caution in large stud or specialty lumber purchases tied to multifamily, given mixed signals and rising delinquency rates in key CMBS/GSE loan segments.

• Leverage the stability of the Canadian labor market (employment up 67,000) as an indicator of stable supply capacity, but monitor US demand signals closely.

• Prioritize securing steady supply streams over chasing low spot prices, as market volatility is low but potential downside is limited by high production costs.

Market Outlook

Pricing Trend: STABLE

Confidence Level: MEDIUM

Recommended Action: Maintain current inventory levels for R&R grades, but delay speculative buys for large dimension or stud packages until January, waiting for confirmation that Q4 housing starts avoided a sharp decline.

How LumberFlow Helps

Use LumberFlow's multi-supplier RFQ system to compare pricing on commodity grades and ensure you are capturing the best value while demand remains stable. Leverage supplier performance metrics to prioritize suppliers with reliable lead times given the mixed commercial real estate outlook.

Ready to stay ahead of market trends? Book a consultation with our team to see how LumberFlow's procurement platform transforms dimensional lumber buying.