Tariff Spike & Affordability Gain: Lumber Demand Stabilizing

Impact on Your Procurement Strategy

The most immediate takeaway for procurement managers is the volatility introduced by policy and supply manipulation. Softwood lumber prices experienced a significant 6.9% month-over-month increase in October, according to Statistics Canada. This spike was not organic demand growth but a direct response to two factors: Canadian operational curtailments reducing available supply, and a rush of buyers pulling forward purchases to beat the additional 10% US tariff on Canadian imports, effective October 14.

For buyers of SPF (the primary import from Canada), this means the true cost increase from the tariff is now being absorbed into the market, pushing prices higher than they would be otherwise. While the initial surge was sharp, expect sustained upward pressure on prices as the higher tariff rate becomes the baseline cost for imported dimensional lumber. This policy-driven cost floor is a critical factor when modeling Q1 2026 budgets, especially as winter logistics and typical seasonal mill shutdowns further constrain supply in Western Canada.

Despite the policy headwinds, the demand foundation is showing signs of stabilizing, providing confidence for medium-term purchasing decisions. Housing affordability improved for the fifth consecutive month in October, with the Mortgage Bankers Association’s PAPI falling 1.6% MoM and 5.5% year-over-year. This improvement—driven by lower mortgage rates, higher household earnings, and flattening home prices—is crucial for activating sidelined homebuyers and supporting R&R activity. The median mortgage payment applied for dropped to $2,039 in October, the lowest PAPI reading since March 2022.

This improved affordability translates directly into sustained demand for wood products, even though the labor market is cooling (unemployment at 4.4%). Stable 30-year fixed mortgage rates, currently averaging 6.26% , reinforce buyer confidence, which is already showing up in existing home sales, which increased 1.2% MoM. Procurement teams should recognize that while the tariff creates a price hurdle, the improving financial environment will support construction and R&R activity, limiting how far prices can fall. This suggests a strategy of securing necessary inventory now to mitigate tariff costs and protect against potential supply shortfalls driven by Canadian curtailments.

Key Takeaways

• Factor the additional 10% US tariff (effective Oct 14) into all Q1 2026 SPF pricing models; this policy cost increase is now baked into the market.

• Affordability is improving (PAPI down 5.5% YoY) and rates are stable (~6.26%), signaling solid demand support for R&R and housing starts in early 2026.

• Monitor Canadian mill curtailments closely; reduced supply, combined with tariffs, justifies securing immediate SPF needs to avoid supply risk premiums.

• Existing home sales rose 1.2% MoM, sustaining immediate R&R demand, particularly in the Midwest and South regions.

Market Outlook

Pricing Trend: STABLE Confidence Level: MEDIUM Recommended Action: Given the stable mortgage rate environment and improving affordability, secure 60-90 days of core SPF inventory before year-end to mitigate the full impact of the 10% tariff and inevitable winter logistics/curtailment risks. Lock in pricing now while demand is still seasonally tempered.

How LumberFlow Helps

Use LumberFlow’s automated price alert system to instantly track how SPF pricing reacts to the newly implemented 10% tariff and ensure you are not overpaying. Our quote comparison dashboard allows you to quickly evaluate multiple supplier quotes simultaneously, helping you navigate the volatility caused by Canadian supply curtailments.

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