Housing Rises 2.0% M/M; Macro Slowdown Confirmed

Impact on Your Procurement Strategy

The latest macro data presents a mixed but cautionary picture for dimensional lumber procurement, balancing persistent price strength against clear signs of economic deceleration.

Softwood lumber pricing is structurally strong, evidenced by the 12.0% year-over-year increase reported in the Canadian Industrial Product Price Index (IPPI) for July. This shows that despite recent market volatility, the underlying cost structure and demand floor have kept prices notably elevated compared to 2024. Furthermore, rising costs for energy and petroleum products (up 2.7% monthly), which impact both mill operations and freight, will place upward pressure on the cost floor for SPF and SYP delivered pricing, making significant near-term price dips unlikely. Buyers must budget for these persistent input cost increases.

The modest improvement in existing home sales, up 2.0% month-over-month to a 4.01 million Seasonally Adjusted Annual Rate (SAAR), is a key positive signal. This activity directly supports dimensional lumber used in repair and remodeling (R&R) projects, a critical demand driver for distributors. This R&R demand provides a necessary buffer against the slowdown in new residential construction. However, the flat 30-year fixed mortgage rate at 6.58% confirms that financing affordability remains the primary obstacle, keeping potential new homebuyers and associated construction activity on the sidelines. While purchase applications are outpacing 2024, many buyers are waiting for rates to further decrease.

The overall economic outlook suggests caution and conservative inventory management. The US Leading Economic Index (LEI) decreased slightly in July and triggered a recession signal, although the Conference Board forecasts a moderate slowdown (1.6% GDP growth in 2025). This forecast is reinforced by softening labor metrics—specifically initial jobless claims rising and insured unemployment hitting its highest level since November 2021 (1,972,000). This indicates weakening consumer confidence and potentially delayed large commercial or residential projects in H2 2025.

Buyers must reconcile the immediate R&R demand strength against the increasing macro risk. Given the high structural lumber prices but weakening long-term demand visibility, the optimal strategy is to prioritize covering immediate R&R needs supported by the existing home sales uptick, focusing procurement efforts on material needed through early Q4. For large-scale forward ordering (Q1 2026), wait until the LEI shows sustained positive momentum or until the Fed signals concrete rate cuts, as high rates continue to cap major demand acceleration. The slight increase in housing inventory to a 4.6-month supply suggests supply availability is adequate across most regions.

Key Takeaways

• Prioritize R&R inventory (2x4, 2x6) based on the 2.0% M/M rise in existing home sales, covering needs through early Q4 2025.

• Expect a higher cost floor for delivered lumber due to the 2.7% monthly rise in energy/petroleum prices affecting freight and mill costs.

• Delay large Q1 2026 forward commitments; wait for the 30-year mortgage rate to fall below 6.0% or for the US LEI to stabilize, mitigating H2 2025 macro risk.

• Monitor unemployment data closely; the rise in insured unemployment (highest since 2021) signals potential future weakness in construction spending.

Market Outlook

Pricing Trend: UP Confidence Level: MEDIUM Recommended Action: Cover immediate R&R material needs through early Q4 supported by the 2.0% rise in existing sales. Hold off on major forward inventory builds until the 30-year rate drops below 6.0% or the LEI reverses its negative trend, signaling broader economic recovery.

How LumberFlow Helps

The economic slowdown increases inventory risk. Use LumberFlow's quote comparison dashboard to evaluate supplier holding costs versus immediate purchase discounts. Since energy costs are rising, utilize our freight optimization tools to minimize the impact of the 2.7% monthly rise in petroleum prices on your final delivered cost.

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