Housing Affordability Up 4th Month; Demand Floor Solidifies

Impact on Your Procurement Strategy

The most critical takeaway for dimensional lumber buyers is the steady improvement in US housing affordability, marking the fourth straight month of gains. The Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI) dropped 1.6% in September, with the national median payment falling from $2,100 to $2,067. This is a powerful signal that the housing market—the engine for dimensional lumber demand across SPF, SYP, and Hem-Fir—is finding its footing. This moderates demand risk significantly heading into Q1 2026.

Improved affordability, driven by stronger earnings (3.2% Y-o-Y increase) and stabilizing mortgage rates, creates a solid demand floor. When payments become more manageable, hesitant buyers re-enter the market, supporting the structural demand for framing lumber (2x4, 2x6, etc.) used in residential construction. While we are currently in a seasonal slowdown, this macro signal suggests that the typical Q1 price trough may be shallower than usual. Buyers should view current pricing as supported by the expectation of "slightly stronger housing demand heading into 2026," as forecasted by the MBA. Do not anticipate steep price drops based on seasonality alone, especially in key demand regions like the US South and the Mountain West.

The Canadian economic data provides a counter-signal, but its impact on US lumber pricing is secondary to US housing demand. Canada’s real GDP contracted 0.3% in August, with goods-producing industries down for the fifth time this year. This weakness, particularly the 0.5% decline in manufacturing, suggests sluggish domestic activity in Canada. For US buyers, this generally means Canadian mills (the primary source of SPF) may lean more heavily on US exports to move volume, potentially easing supply pressure. However, the advance estimate for September GDP showed a rebound (0.1% increase), so the contraction might be a short-term blip rather than a sustained recessionary trend impacting supply availability.

For procurement managers, the improved affordability (PAPI down 1.6%) is the key timing trigger. The risk of a sharp housing downturn has lessened. Buyers should shift focus from extreme price hunting to securing volume for the spring build season. Lock in forward contracts for high-volume items (SPF 2x4s and SYP 2x10s) now, leveraging current lead times, instead of waiting until early January when stabilizing rates and renewed builder confidence could drive sudden price swings. The improvement in the Builders’ PAPI (payment decreased to $2,162) reinforces that builders are seeing better conditions, which typically precedes increased activity and higher lumber demand.

Key Takeaways

• Leverage the 4th consecutive month of affordability gains as a signal to secure core inventory for early 2026; demand risks are moderating.

• Canadian GDP contraction (-0.3% in August) suggests domestic weakness; monitor Western SPF supply, but US housing demand is the primary driver.

• MBA forecasts stabilizing rates and flat prices, signaling a solid demand floor. Avoid deep inventory cuts based purely on Q4 seasonality.

Market Outlook

Pricing Trend: STABLE Confidence Level: MEDIUM Recommended Action: Given the stabilizing demand floor and anticipated stronger 2026 start, secure 60-75% of Q1 SYP and SPF inventory needs by the end of November to lock in current pricing before potential rate stabilization drives demand.

How LumberFlow Helps

With affordability improving and demand stabilizing, buyers need accurate volume planning. Use LumberFlow's forecasting tools and historical data to model your required Q1 inventory levels based on the anticipated "slightly stronger housing demand" for 2026. Additionally, use our multi-supplier RFQ system to quickly source and compare pricing from major SPF and SYP regions before demand pushes prices higher.

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