Although both US housing starts and sales data are showing some resilience in the face of an extremely difficult and volatile macroeconomic backdrop, several alarm bells are beginning to ring for the U.S. housing market. Mortgage rates, which have moved steadily higher over the past six months, are certainly cause for concern. …At the beginning of the year most pundits, including ourselves, expected some modest near-term rate relief; we are seeing the exact opposite unfold. With the conflict in the Middle East still far from resolved, we anticipate that elevated oil/energy prices will result in continued inflationary pressures through year-end (at least) and elevated mortgage rates will continue to drag on both new home construction and home sales activity (the latter which negatively impacts wood products demand from repair and remodel). 

According to the CME’s FedWatch tool, it’s a coin toss whether or not the Fed hikes by 25bps when it meets in mid-September, and the CME indicates an almost 38% probability that the funds rates will be 50bps higher by year end. And unsurprisingly, homebuilder confidence continues to worsen, and the NAHB/Wells Fargo HMI slipped by another 2 points to 34 in July. The NAHB’s Multifamily Production Index (MPI) which measures builder sentiment in the apartment and condo market, was off by 3 points. 

Key Price Takeaways include:

• Solid Wood: Lumber markets have held up well through the first half of the summer with S-P-F prices, in particular, bucking seasonal trends by grinding higher in July. However, this month we are seeing some cracks emerge, with more pronounced weakness in SYP and modest declines in S-P-F. Nevertheless, Q2 earnings were generally impressive for lumber producers, but less so for OSB. The recent rollover in lumber prices suggests some weakness ahead. 
• Timber/Log: Log prices have been uneventful in most markets, with prices remaining near recent levels. Timberland markets were quiet in H1, but a few larger deals have transpired, with more expected in the second half of 2026. 
• Pulp: Prices for all grades are weak (softwood) or falling (hardwood and fluff). Closures/downtime to date have been insufficient turn the tide with China no longer buying aggressively when prices drop to cash-cost levels (notably for NBSK). Financial strain is apparent for several key softwood pulp producers, with prices unlikely to improve until inventories decline. 
• Paper prices are steady for August, with newsprint the only grade with support for an upcoming price hike (+$60, Sep 1). 
• Containerboard producers are embarking on a third increase for this cycle, with the over-aggressive suggestion of +$140 by PKG toned down to a more achievable $80–100 by other producers. Some supply shocks have helped keep the market snug and inventories have finally fallen below the historically critical 4 weeks’ supply. New supply will soon begin to ramp up (e.g., IP’s Riverdale), but not soon enough to undermine the current tightness leading up to the September hike. This third hike will likely fall a bit short, but should be mostly successful. 
• Boxboard demand moved up in Q2 by nearly 1%, with CUK the top performer, SBS growing and CRB continuing to contract. Operating rates moved up for most grades, except CRB. Announced price hikes for URB did not gain traction in July, but should this month. New hikes for SBS/FBB and CUK have been announced ($50–60), and GPK also plans to hike its CRB prices ($50). The gap between CRB and bleached grades has widened a bit, but needs to expand for CRB to win back market share.