There are solid reasons to expect near-term strength in the US and Canadian construction markets. In the US, rapid technological progress and supportive federal policies are driving major investments in semiconductor fabrication, AI-related data centers, and energy infrastructure, with growing momentum toward nuclear power. In Canada, federal and provincial governments are promoting “nation-building” projects that emphasize LNG export capacity, port expansions, and new mines for critical minerals required by the digital economy. Both nations recognize that housing supply must rise substantially to meet population needs, signaling a long-term boost in residential construction. Yet, 2025 proved disappointing for overall construction performance, especially in employment. …Housing activity revealed a sharper divide between the two nations. U.S. housing starts in November 2025 dropped to an annualized 1.246 million units, the lowest since the pandemic. Most analysts believe the country needs at least 1.5 million starts per year to meet demand.
Lumber futures rose toward $535 per thousand board feet, rebounding from the September low of $528 reached on January 7th after a low liquidity holiday sell off unwound, improving seasonal demand expectations and longer term supply tightening. Renewed engagement from market participants, signaled that forced selling and the thin trading conditions that pushed prices to multi month lows have faded. Seasonal demand expectations have strengthened as builders begin positioning ahead of the spring construction period, when consumption typically improves following year end destocking. Industry forecasts point to a modest pickup in US housing starts and repair and remodel activity in 2026 as interest rates ease and trade uncertainty recedes, supporting demand after a weak finish to 2025. At the same time, longer term supply growth remains constrained by ongoing tariffs on Canadian softwood and slower capacity expansion across North American sawmills, limiting surplus.
Canada is becoming far more attractive in commodity goods to the rest of the world, as it diversifies its trade away from the US, says one analyst. Imports outpaced exports in October. Merchandise imports increased by 3.4% in October while exports increased by 2.1%. Because of this, Canada’s merchandise trade balance went from a surplus of $243 million in September to a $583 million deficit in October. …William Pellerin, a trade lawyer, said whether it be Malaysian kitchen cabinet manufacturers, or Chinese goods, he said “Canada is becoming far more attractive at lower pricing in many commodity goods and in many manufactured sectors.” On the other hand, the data shows exports to the US made up 67.3% of all Canadian exports, which is the lowest since the pandemic. …Cabinet and wood makers face a difficult challenge as they face a 25% tariff and lose access to the US market, said Pellerin.
Lumber futures slid below $530 per thousand board feet, testing the lowest levels since October 2024, as weak near-term demand collided with abundant and re-emerging supply. Homebuilding activity remains subdued and mortgage borrowing costs are still elevated, restraining new starts and repair and remodel demand, while US housing starts have softened and 30-year mortgage rates entered January little changed near the mid-6% range. At the same time structural supply pressures are returning, with several panel and OSB mills ramping up or preparing to add capacity and shifts in North American output seeing Canadian curtailments largely offset by higher production in the US South, keeping physical availability ample and capping any upside. In the meantime, inventory and futures market activity increased over the holiday period, amplifying downside moves when buyers stayed sidelined after year-end and seasonal restocking remained muted. [END]
President Trump’s tariff and trade policies dominated the world’s political discourse through 2025. …The good news is that the BC economy has been fairly resilient through 2025. …BC trade resilience can also be attributed to a broader export commodity mix, dominated by forestry, agricultural and seafood products, as well as mining and oil and gas. …Forest products were tagged with a sectoral tariff of 10 per cent in October 2025, on top of new anti-dumping and countervailing tariffs on softwood lumber. …This has put tremendous pressure on an industry. …It’s difficult to disentangle the impact of tariffs from overall adverse trends in the BC forest industry, many mill closures and curtailments in recent years. BC forestry exports are among the most exposed to the US market, with about 75% of forestry exports headed south. Exports of softwood lumber were down 26% in August 2025 compared to August 2024. Pulp and paper exports were also down 9% on a year-to-date basis compared to 2024.
The 
Lumber futures traded above $550 per thousand board feet as markets absorbed a dovish turn from the Federal Reserve that brightened the demand outlook for construction materials. The Fed’s widely anticipated 25bp cut and Chair Powell’s dovish rhetoric pushed traders to price additional easing next year, which should put downward pressure on mortgage rates and lift homebuilding and renovation activity. Those interest rate dynamics have heightened the incentive for builders and distributors to restock, while persistent tariff and trade frictions have constrained supply. Canadian log exports are down year to date even as shipments into the US have risen, Canadian manufacturing output has slipped and US lumber exports are lower, a mix that reduces available millfeed and forces buyers to compete for the supplies that remain.
The Bank of Canada is holding its key interest rate at 2.25%, a move that was widely expected after an encouraging round of third-quarter data showed the Canadian economy has withstood some trade war-induced turmoil. Central bank governor Tiff Macklem wrote in his opening remarks that the current rate is at “about the right level” to give the economy a boost while also keeping inflation close to its 2% target rate. Canada’s economy proved more hardy than expected in the third quarter, with GDP and jobs growth beating expectations, and the unemployment rate dropping to 6.5% in November. Inflation is hovering just above 2%, and the Bank of Canada’s core measures of inflation are trending closer to 3%. While the steel, aluminum, auto and lumber sectors have been pummelled by US tariffs, which is weighing more broadly on business investment, “the economy is proving resilient overall,” Macklem said.
B.C.’s GDP is forecast to increase by 1.6% this year, 
In the third quarter of 2025, the NAHB remodeling index (RMI) posted a reading of 64, increasing four points compared to the previous quarter. Most remodelers are finding reasonably strong market conditions, even with the normal seasonal slowdown during the holidays. The major headwinds the industry is experiencing continue to be rising costs and potential customers hesitating due to policy and economic uncertainty. Demand for remodeling is being supported by an aging housing stock, strong homeowner equity and increasing need for aging-in-place improvements. …In the fourth quarter of 2025, the Current Conditions Index averaged 71, increasing three points from the previous quarter. …The Future Indicators Index averaged 56, up four points from the previous quarter. 
WASHINGTON — US single-family homebuilding rebounded in October, but permits for future construction eased, signaling caution among builders as new housing inventory remains high and demand soft. Single-family housing starts, which account for the bulk of homebuilding, increased 5.4% to a seasonally adjusted annual rate of 874,000 units in October, the Commerce Department’s Census Bureau said on Friday. Starts dropped to a pace of 829,000 units in September from a 869,000-unit pace in August. The reports were delayed by the 43-day government shutdown. …Permits for future single-family homebuilding fell 0.5% to a rate of 876,000 units in October. They increased to a pace of 880,000 units in September from a 858,000-unit rate in August.
Long-term mortgage rates have been declining since mid- 2025 and ended the year at their lowest level since September 2024. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.19% in December, 5 basis points (bps) lower than November. Meanwhile, the 15-year rate declined 3 bps to 5.48%. Compared to a year ago, the 30-year rate is lower by about half a percentage point, or 53 basis points (bps). The 15-year rate is also lower by 45 bps. …Falling lower mortgage rates have started to translate into gains as existing home sales edged up slightly in November. However, this increase remains limited as mortgage rates above 6% are still considered elevated. Nonetheless, as financing costs continue decline, more households are likely to reenter the housing market. …NAHB expects the 30-year mortgage rate to average 6.17% in 2026 and would reach 6% by 2027.
The recent softening demand and prices in the lumber market represent a critical inflection point, marking a transition from unprecedented volatility to a more complex, albeit somewhat stabilized, environment. The key takeaway is that while the extreme highs of the pandemic era are behind us, lumber prices have established a new, elevated baseline, significantly impacting housing affordability and construction costs. This recalibration is driven by a delicate balance of oversupply in some segments, subdued but potentially recovering demand, and persistent supply-side challenges, including increased tariffs on Canadian imports and ongoing labor shortages. …The lasting impact of this period will likely be a more resilient and adaptable construction industry. …The market is not returning to its pre-pandemic state; rather, it is evolving into a new equilibrium where strategic foresight and agility will be paramount for success.
Nonfarm payrolls grew slightly more than expected in November but slumped in October while unemployment hit its highest in four years, the Bureau of Labor Statistics reported Tuesday in numbers delayed by the government shutdown. Job growth totaled a seasonally adjusted 64,000 for the month, better than the Dow Jones estimate of 45,000 and up from a sharp decline in October. The unemployment rate rose to 4.6%, more than expected and its highest level since September 2021. A more encompassing measure that includes discouraged workers and those holding part-time jobs for economic reasons swelled to 8.7%, its peak going back to August 2021. In addition to the November report, the BLS released an abbreviated October count that showed payrolls down 105,000. While there was no official estimate, Wall Street economists were largely expecting a decline following a surprise increase of 108,000 in September.
ATLANTA — Home Depot gave a cautious outlook for fiscal 2026 as the housing market continues to lag. Shares of the home-improvement retailer fell 2.4% to $341.62 in premarket trading on Tuesday. The company expects sales to rise between 2.5% to 4.5% in fiscal 2026, the midpoint of which is up from its guidance for 3% growth this fiscal year. Analysts polled by FactSet were looking for growth of 4.5%. …Home Depot said it expects those metrics to rise at a faster clip if the housing market gains momentum and there is increased spend on larger projects, driven by pent-up demand. The Atlanta company’s market-recovery case forecasts sales will grow about 5% to 6%, earnings per share will increase about mid- to high-single digits and comparable sales will be up 4% to 5%. “We believe that the pressures in housing will correct and provide the home improvement market with support for growth faster than the general economy”.
The US Federal Reserve is poised to deliver its third straight interest rate cut Wednesday, while simultaneously firing a warning shot about what’s ahead. Following a period of remarkable indecision about which way central bank policymakers would lean, markets have settled on a quarter-percentage point reduction. If that’s the case, it will take the Fed’s key interest rate down to a range of 3.5% to 3.75%. However, there are complications. The rate-setting Federal Open Market Committee is split between members who favor cuts as a way to head off further weakness in the labor market and those who think easing has gone far enough and threatens to aggravate inflation. That’s why the term “hawkish cut” has become the buzzy term for this meeting. In market parlance, it refers to a Fed that will reduce, but deliver a message that no one should be holding their breath for the next one.
The average mortgage rate in November continued to trend lower to its lowest level in over a year. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.24% in November, 2 basis points (bps) lower than in October. Meanwhile, the 15-year rate increased 3 bps to 5.51%. Both the 30-year and 15-year rates remain lower than a year ago, dropping by 57 bps and 52 bps year-over-year, respectively. …Falling mortgage rates have shown some impact on housing activity. Mortgage application activity continues to strengthen, led by increases in adjustable-rate mortgages and refinancing applications. Additionally, existing home sales rose to an eight-month high in October. There is no data available for new home sales in October due to the government shutdown.
KUCHING, Malasia — Chinese timber companies are struggling in their businesses due to insufficient orders for their products amid a weak global market. They have complained about poor demand in the timber market and intense competition in terms of product prices. Adding to their woes are rising raw material costs, according to the key challenges reported in the Global Timber Index-China Index report in November 2025. …To mitigate the challenges, Chinese enterprises suggested the need to expand into international markets to increase the volume of orders for their products, and called for government policy support for their operations. …Back home, China reported strong domestic retail sales of furniture, reaching 17.9 billion yuan in October, a 9.6 per cent increase from a year ago. …In a related development, China reported a robust export market for its particleboard, which surged by 67 per cent in volume.