Trees weren't the shortage

In the spring of 2020, sawmills braced for a pandemic slump and cut production. In April, an estimated 35% of North American lumber capacity was offline. Instead, demand boomed: people stuck at home remodeled, and record-low mortgage rates set off a building surge.

The result was the sharpest run-up in lumber prices on record. The Bureau of Labor Statistics reported that producer prices for lumber rose 89.7% in the year to April 2021, the largest 12-month increase since the data began in 1927. By May 2021 the softwood lumber index had reached 2.5 times its February 2020 level.

Now look at the logs. The index for logs, bolts, timber and pulpwood is a broad measure of what sawmills and paper mills buy, not an exact match for the logs behind softwood lumber. Even so, it rose at most 16%. Texas A&M Forest Service data show southern timber prices barely moved while lumber soared.

Lumber fell sharply in mid-2021 as mills raised output, then spiked again. By March 2022 it was back to 2.35 times its pre-pandemic level, as strong building demand met fresh supply problems, including November 2021 floods in British Columbia that cut rail lines from interior mills. By March 2023 lumber was down 49% from a year earlier.

Sawmill capacity wasn't the whole story; the Texas A&M analysis also points to demand, transportation and regional timber conditions. But the gap between the two lines makes the main point. Expensive boards did not mean equally expensive trees: much of the scarcity lay between the forest and the building site.