As the US–Iran conflict rumbles into a third month and the global economy faces myriad challenges (rising energy prices, slowing growth, swelling inflation, geopolitical fragmentation, etc.), it comes as little surprise that US consumer sentiment is also in freefall. The latest University of Michigan survey showed consumer sentiment plummeting toward record-low levels in April: down 3.5 points to 49.8. Miserable sentiment was seen across political affiliations, income distribution, age and education levels—concern is universal! Other consumer surveys from Michigan yielded equally depressing results, with expected business conditions for both the near-term and the long-term declining, while expectations for year-ahead inflation rose from 3.8% in March to 4.7% in April (the largest increase in 12 months). 

Closer to our forest products universe, the National Association of Homebuilders/Wells Fargo Housing Market Index (HMI), a metric that tracks homebuilder confidence in the single-family housing market, declined by 4 points to a reading of just 34 in April. Builder confidence had shown signs of recovery through the second half of 2025; however, with this latest sharp decline, the index is nudging back toward record lows. 

A resolution to the conflict in Iran will not be the magic solution that fixes consumer confidence and alleviates concerns about inflation; that horse has left the barn. Remedying this latest malaise will take a sustained period of economic and political stability, something we simply haven’t seen since President Trump’s second tenure began. Further, with CUSMA/USMCA renegotiations looming large on the horizon, a new source of uncertainty abounds, especially for producers with assets located in Canada which currently enter the US duty free (e.g., OSB, pulp, paper, packaging, etc.). 

…Based on the resilience shown in the US housing market last month, we are maintaining our full year 2026 U.S. housing start forecast of 1.325MM units. With our revised forecast for 2026 and given expectations for lumber demand from R&R to be flat (at best) this year, we now anticipate that overall North American lumber demand will decline by 350MMbf y/y in 2026 (we had previously forecast flat demand versus 2025). However, despite this deterioration, we believe North American markets will remain well balanced, and that overall lumber prices will stay quite strong this year relative to historical averages given declining supply in several regions (note that profitability for Canadian mills will be challenged by ongoing, elevated duties and tariffs).

…Other takeaways include:

• Solid Wood: Lumber prices appear to have topped out, with both S-P-F and SYP prices now slipping. The seasonal demand bump is complete, while supply has expanded as some US South sawmills add hours/shifts or restart. April pricing was likely the peak for SYP, but we don’t foresee a collapse back to Q4 lows. OSB demand is weak but the outlook has improved given that new capacity looks unlikely this year. 
• Timber/Log: Log prices are generally flat to down; there is some hope exports could improve. The oversupply of pulpwood in the US South is acute, with lots of options being explored but no silver bullets. Timberland markets are quiet as buyers adjust to the reality of weak cash flows. 
• Pulp: Softwood prices continue to languish while hardwood nudges higher; hardwood’s discount to softwood has compressed meaningfully. However, fluff pulp is one of the strongest grades at the moment, aided by a recent shut. 
• Paper prices were generally stable this month but more price hikes/surcharges have been slated for Q2. The only grades not seeing hikes this year are coated mechanical and SC. PPI Pulp & Paper Week suggests UWF grades are up $100 so far this year, but our channel checks report much less. 
• Containerboard: Producers achieved the remainder of their planned $70 price hike this month (net $50 increase since January). Box shipments were miserable yet again, falling nearly 2% y/y in Q1. Market-related downtime and likely another machine/mill closure will be needed to push prices up once again. 
• Boxboard: Oversupply remains a key issue in the boxboard segment (the bleached grades in particular). In that vein, more shuts/reductions are needed in the industry. We suspect CRB prices will fall to help the grade regain lost market share. We foresee more closures this year before prices improve.