Impact on Your Procurement Strategy

Current market signals indicate that the recent pricing rally is reaching a resistance level. While framing lumber prices rose 6.2% over the last three weeks, that momentum is now decelerating. We are operating in a high volatility regime (11.4%), which suggests that while prices are currently elevated, the risk of a sudden correction is increasing. Our ML forecast predicts a STABLE price direction for the coming week, reinforcing our recent shift away from a bullish stance.

The macro indicators provide the 'why' behind this cooling trend. Despite a headline gain in construction jobs for January, the residential sector has recorded a net loss of 43,600 jobs over the past year—the longest stretch of annual declines since the Great Recession. This labor contraction, paired with a 2.0% drop in mortgage purchase applications, suggests that the end-use demand for dimensional lumber is not robust enough to sustain further significant price hikes.

Regional activity in Canada offers a mixed signal. While total building permits rose 6.8% in December, the growth was heavily concentrated in multifamily projects, while single-family permits actually declined by $119.7 million. For distributors, this means demand may shift toward different product mixes (e.g., more fire-rated materials or larger dimensions for multifamily) rather than standard residential framing packages.

Given that technical indicators show the market is currently stretched—meaning prices have moved up too far, too fast relative to historical averages—the probability of a price plateau is high. Procurement managers should avoid 'chasing the market' at these levels. Instead, focus on maintaining lean inventory levels and wait for clearer demand signals from the spring building season before committing to large-scale forward buys.

Key Takeaways

• Halt aggressive inventory building as price momentum decelerates from its recent 6.2% three-week climb.

• Monitor residential employment trends; the six-month negative average in job gains suggests a cooling single-family construction market.

• Prioritize multifamily inventory needs over single-family, following the $653.2 million increase in Canadian multifamily permit values.

Market Outlook

Pricing Trend: STABLE

Confidence Level: MEDIUM

Recommended Action: Limit procurement to immediate-need fill-in orders through February 20; avoid speculative volume until mortgage application trends stabilize.

How LumberFlow Helps

Use the weekly price forecast to identify when the current price plateau turns into a correction. Buyers can also leverage the agentic sentiment analysis within LumberFlow to compare supplier quotes against real-time market cooling signals, while staying updated via our daily market insights.

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