David Rossi

Over 300,000 acres burning in Oklahoma this week, mostly in the western panhandle region. Red flag warnings issued across the state. Some smaller fires are currently burning in the more heavily forested eastern region of the state as well.

www.oklahoman.com/story/weathe...

While starts were comparatively flat, annual building permits issued (-4.2%), average units under construction (-13.1%), and total housing completions (-7.9%) were all down in 2025.

Latest New Residential Construction report: total housing starts in 2025 were estimated to be 1.359 mil. units, down just 0.6% from 2024. In 2025, 69% of these starts were single-family units, which is down from 74% in 2024.

The $WOOD ETF is up 14.3% YTD. Likely factors contributing to a higher valuation are the completion of the RYN/PCH merger, a Stora Enso spinoff of its Swedish forest assets, and earnings beats by WFG & UPM-Kymmene. SPF spot prices (+9%) and futures prices have also recovered over the last 2 months.

The Biggest Challenges Expected by Home Builders in 2026 According to the latest NAHB/Wells Fargo Housing Market Index, 84% of home builders felt the most significant challenge builders faced in 2025 was high interest rates and 65% anticipate interest rates...

From the NAHB: "84% of home builders said that elevated mortgage rates was the most significant challenge builders faced in 2025, and 65% anticipate interest rates will remain a problem in 2026."
www.nahb.org/blog/2026/02...

January 2026 employment in the Mining/Logging sector was estimated to be 603 thous. workers, down 3.1% from a year ago. Avg. monthly employment in these sectors during 2025 was down 2.7% from 2024 and down 7.7% from its average over the prior 10 years (2015-2024).

Forestry leaders outline urgent short-term solutions and long-term challenges amid mill closures The November 17, 2025, forestry meeting in Bulloch County brought state and industry leaders together to outline the severe economic impacts of recent mill closures and the global competition reshapin...

www.griceconnect.com/local-news/f...

From economist Devon Dartnell-current challenges depressing US timber markets: weak lumber prices + sluggish housing sector + high interest rates, declining domestic pulp demand & increased foreign production capacity, weak demand for residual chips from pulp manufacturers, higher forest mgmt costs.

Mortgage Rates Declined Despite Higher Treasury Yields – Eye On Housing Long-term mortgage rates continued to decline in January. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.10% last month, 9 basis points (bps) lower than December. Meanwhile, the ...

eyeonhousing.org/2026/02/mort...

From the NAHB: "the 10yr Treasury rate at the beginning of 2026 was at 4.1%. The rate has now increased to 4.3%. This unfortunately means the beneficial impact of the $200 bil. of additional acquisition of Fannie Mae and Freddie Mac MBS...has been partially offset by international concerns."

Retail sales of building materials and garden equipment expanded rapidly during the pandemic by 13.1% in 2020 and 14.3% in 2021 (reaching a peak of $508.4 bil. in 2022). Annual sales have remained elevated totaling $488.5 bil. in 2024. Thru Nov. it was on pace to decline 0.9% in 2025 to $484.0 bil.

Preliminary data from the December PPI report shows that softwood lumber prices were down 8.2% Y/Y while hardwood lumber prices were up 6.1%. Large Y/Y declines were observed for some paper/board products, including wood pulp and hardboard/particleboard/fiberboard. Timber/chip prices were flat Y/Y.

From Dr. Brent Sohngen: "Active Forests." A recent publication reports that "...since the turn of the century in the conterminous U.S., anthropogenic factors have contributed 55% of all carbon gain in forests while non-anthropogenic factors have provided the rest."
u.osu.edu/forest/2026/...

Southern* US Atlantic coast states.

Across the US Atlantic coast states, softwood timber utilization from 2020-2024 declined by 2.0%/yr. while hardwood timber utilization declined by 3.5%/yr. Much of the overall decline was driven by a 234 MMCF decrease in softwood pulpwood use. Softwood timber was ~84% of total utilization.

The CRFB estimates $2.2 trillion in lost revenue through FY2035 if the supreme court rules recent tariffs to be illegal. Markets seem to be expecting this outcome. www.crfb.org/blogs/replac...

Given recent trends in federal outlays, tax cuts, and a potential ruling that recent tariffs are illegal, 10yr yields seem likely to remain above 4% this year.

Mortgage rates still expected to remain above 6% this year, with the 30yr mortgage - 10yr yield spread remaining close to 2 perc. points. The legality of last year's tariffs will probably indicate the direction of the deficit and yields.

Mortgage rates followed the decline in 10yr yields over the last year, falling from 7% in mid-Jan 2025 to 6.1% this year. Strong economic growth was likely driving this trend, pulling down the deficit as a % of GDP. Tariff revenues stabilized deficit expansion, even as federal outlays grew in 2025.

The latest USFS data shows that annual softwood timber utilization by sawmills and veneer production facilities in NC declined 7% in 2024, while hardwood utilization by such mills expanded by 6%. Timber utilization by pulp, composite, and bioenergy facilities expanded by about 9% for all species.

The plywood price changes by species from Nov. 2024 to Nov. 2025 were consistent with the trend in lumber. Softwood plywood prices fell 5% Y/Y while hardwood plywood prices grew 6% Y/Y.

Latest PPI report showed a decline of nearly 7% in softwood lumber prices from Nov. 2024 to Nov. 2025. This is consistent with the year's housing trends and weak demand. Hardwood lumber prices grew 6% in the opposite direction on tight inventories while plywood prices were flat Y/Y.

David J. Rossi, Ph.D. David J. Rossi, Ph.D.Forest EconomistRaleigh-Durham, NC

Links to my research:
sites.google.com/view/david-j...

While last year's 3.7% inflation in sawmill machinery prices was its lowest since 2020 (and lower than the annual average of 5.5% from 2015-2024), this year's increase of 6.7% (through September) seems to support a longer term trend of rising price inflation in the sector.

Quarterly prices for sawmill & woodworking machinery were growing at an annual average pace of of 4.0%/yr. from 2015-2020. Prices have since grown at a faster pace of 7.5% since 2021. This year, prices for sawmill & woodworking machinery were up 6.7% through September.

This share fell to 3.8% in Q3, its lowest since Q2 2019.

The top 5 Christmas tree producing states in 2022 were: Oregon, North Carolina, Michigan, Washington, and Pennsylvania. These states accounted for 79% of Christmas tree production that year, and represent about 52% of the total U.S. acreage devoted to the production of Christmas tress.

The data above accounts for non-WFM Hazardous Fuels obligations under the NFS accounts from 2018-2022.

The share of USFS fire management obligations devoted to suppression averaged 57% from 2016-2025. This percentage will be 100% in FY2026 under the current budget proposal, but accounting for reallocation of the Fuels budget to the new "Wildland Fire Service" in the DOI, the share is more like 93%.

BLS to Skip October PPI Report The BLS will skip publication of its delayed report on wholesale-price inflation, and will instead roll those figures into a postponed November report to be published on Jan. 14.

Interested to see how lumber and chip prices have changed during Q4. The combined October and November PPI data is now delayed until mid-January.
www.wsj.com/economy/bls-...