Are Lumber Prices Going Up or Down in 2024?

Timber! The lumber market has been a rollercoaster ride in recent years, with prices soaring to unprecedented heights before experiencing a much-needed, and long-awaited, correction. With the (saw)dust now finally settling and the market stabilizing, it’s time to look ahead to understand upcoming trends that will shape the lumber industry in the coming years. Is the lumber market finally finding its footing or are more ups-and-downs on the horizon? Let’s find out.

Causes of The Boom in Wood

Before going over the details, it’s important to look at some of the key factors that have impacted the big picture. An unexpected spike in prices was mostly due to a perfect storm of high demand, supply chain disruptions and a global emphasis on sustainability. Wood, once a relatively stable commodity, suddenly became the darling of the construction industry and once the market picked up on this trend, the spotlight grew ever more pronounced. This was due to three main factors.

Persistent Demand

A surge in housing starts, fuelled by low-interest rates and a shift towards remote work, resulted in a robust demand for construction materials. This growing appetite for new homes and renovations placed immense pressure on the lumber supply chain. Additionally, the DIY boom, spurred by pandemic lockdowns, further fuelled demand for wood products as homeowners embarked on home improvement projects.

A Disrupted Supply Chain

Major lumber-producing countries were faced with significant wood production pressures, exacerbated by the aftermath of the COVID-19 pandemic, intensified by extreme weather events and, surprisingly, compounded by beetle swarms that racked up prices 200-300%. So, from the supply side, issues – particularly impacting Canada and the US – collided with high demand. Importing prices were thus too high, so a lot of excess wood didn’t make it to the market, with Europe relying on its local infrastructure.

Shift Towards Sustainability

Looking closely, one of the biggest factors driving a continued demand for wood is its glowing reputation as a sustainable building material. Increasingly concerned by its environmental impact, the construction industry swayed heavily towards wood as a building material, and with good reason. From its ability to store carbon to its renewable nature, wood is seen as a greener alternative to other materials, going hand-in-hand with the construction boom. This huge positive outlook aligned perfectly with net-zero trends and affected overall demand.

The Future of Lumber

The period of intense volatility is now finding equilibrium, and with it – stable future prospects. The road ahead seems positive and confident, with 2025 looking optimistic and our stats indicating a lasting, favourable trend seeping all the way into 2029. The construction sector will be the driving force behind this growth, with architects and contractors dead set on a promising landscape for the lumber industry. So, let’s talk specifics about material usage trends and the long-haul.

Building Envelope

Our metrics show a significant upswing vis-à-vis building envelope materials, with timber sheets headed for popularity and a substantial increase of +41%, as opposed to masonry bricks (+12%), prefab concrete (+23%) or metal sheets (+16%). German (+67%) and Dutch (+65%) trends seem particularly favourable.

Fa?ade materials

We’re seeing a telling rise of +46% in expected use of wood in fa?ade materials, overwhelmingly dominating stone wool cladding (+22%), fibre cement panels (17%) and HPL panels (12%). Most notably, Germany (+59%), France (+56%) and The Netherlands (+47%) are poised for a five year growth pattern.

Prefab trends

As far as architects are concerned, for fully finished prefabricated elements, wood is clearly a dominant structural basic material. Fa?ades are expected to prevail with a 40% stake, followed by a “close second” in concrete (29%), inner walls 43% with concrete at 19%, while pitched roofs will take the win with 55% overall projected value in wood, with concrete at 11%. Contractors, however, still favour concrete when it comes to plain and unfinished elements, so a trend of friction and growth is noted for both elements, with wood eventually taking centre-stage. For the time being, concrete is still very much present, but its share is decreasing.

The growth of prefab is not expected to increase strongly short-term, but is set to accelerate mid-term, with architects reporting a 33%-39% jump come 2030 and contractors dipping to 35% in 2025, but rebounding in 2030 with 40%.

Conclusion

The lumber market has undergone a significant transformation in recent years. With prices finding balance and demand remaining robust, the future of wood in construction looks promising. A combination of factors, including increased demand driven by construction and sustainability trends, and a shift towards wood in building envelopes and prefabricated structures, is propelling the industry forward.

Data indicates a promising trajectory for the lumber market, with a growing preference for wood as a building material across various construction sectors. This shift, combined with ongoing construction activity and a renewed focus on sustainability, positions the industry for sustained growth.

As the construction industry continues to evolve, the lumber market is well-positioned to capitalize on the growing demand for sustainable and innovative building solutions. To stay updated on the latest developments in the lumber market, keep a look out for USP’s research market reports, webinars and stats.