Residential Job Losses Signal Softening Lumber Demand

Impact on Your Procurement Strategy

The latest BLS data confirming that overall US construction employment fell by 7,000 in August—marking the third consecutive monthly decline—is a clear signal that the underlying pace of residential construction is decelerating. The residential sector specifically lost 6,100 jobs, reflecting job losses in five of the past six months and a net loss of 26,100 jobs over the past year. For dimensional lumber buyers, this translates directly into reduced pull-through demand for prompt loads of standard framing packages (e.g., SPF and SYP 2x4s and 2x6s). This weakening labor signal suggests a short-term pricing risk to the downside, justifying a strategy of purchasing based strictly on immediate need rather than speculative stocking.

However, this bearish signal is significantly offset by the robust capital flowing into the multifamily sector. The Mortgage Bankers Association reported a 17% increase in multifamily lending in 2024, reaching $288.7 billion. This strong financing activity, with GSEs (Fannie Mae and Freddie Mac) accounting for 41% of the volume, indicates that high-density housing construction is heavily financed and moving forward on longer timelines. Since multifamily projects utilize substantial volumes of dimensional lumber, especially longer lengths, studs, and specific engineered wood products, this lending strength acts as a crucial demand floor for the overall market, preventing a sharp downward correction in commodity prices.

Given these mixed signals, buyers must differentiate their inventory strategy. The negative six-month moving average of residential job gains (losing an average of 4,783 jobs per month) reinforces the need for lean, just-in-time inventory for standard commodity items tied to volatile single-family starts and remodel activity. This is particularly relevant for buyers serving the Midwest and Northeast R&R markets. Conversely, for SYP and other products heavily used in foundation and mid-rise construction in the US South, the strong multifamily lending data warrants securing future supply commitments.

We forecast pricing volatility will remain low, settling into a stable to slightly soft range through the end of Q4 2025. Buyers should leverage the current labor weakness to negotiate marginal price concessions on immediate commodity needs, but should not delay securing supply for major projects scheduled for Q1 2026, as the multifamily pipeline remains robust.

Key Takeaways

• Leverage immediate market softness—driven by the loss of 6,100 residential jobs—to negotiate better pricing on prompt SPF and SYP commodity loads this month.

• Secure supply commitments for long-length framing packages needed for multifamily projects, capitalizing on the 17% increase in available lending capital.

• Maintain lean inventory on volatile standard grades; the long-term multifamily pipeline prevents a major price collapse but demand is slowing regionally.

• Monitor Western Canadian mill operating rates; if job losses accelerate, mills may implement curtailments, quickly reversing the current soft pricing trend.

Market Outlook

Pricing Trend: STABLE Confidence Level: MEDIUM Recommended Action: Use the residential job contraction signal to push for 2-3% discounts on prompt loads of SPF 2x4s this week. Delay speculative stocking until Q4 housing start forecasts confirm stabilization.

How LumberFlow Helps

LumberFlow's RFQ comparison tool allows buyers to quickly source bids across multiple suppliers, leveraging the current market softness to secure favorable pricing. Use our inventory management system to keep standard commodity stock lean while tracking long-term commitments for strong multifamily projects.

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