US Lumber Futures Fall 13.4% as German Sawmills Face Cost Squeeze

US housing weakness weighs on lumber

North American lumber futures have fallen sharply as weaker US housing activity weighs on construction demand. The CME lumber contract closed at $560.50 per 1,000 board feet on August 27, 2026, down from $647.50 on July 27. That represents a decline of about 13.4% in one month, including a 1.06% fall on August 27, according to ms-aktuell.de.

The contract reflects standardized North American softwood lumber rather than a single global timber price. Each physically deliverable contract covers 27,500 board feet, with quotations in US dollars per 1,000 board feet. Species, quality, processing, location and delivery terms can produce substantially different prices elsewhere. The CME movement is therefore an important market signal, but it cannot be treated as a direct benchmark for logs purchased by German sawmills.

Demand conditions help explain the US decline. New single-family home sales fell 10.5% month on month in July 2026 to a seasonally adjusted annual rate of 607,000, the lowest level since January, according to the US Department of Commerce figures cited by ms-aktuell.de. The average rate on a 30-year mortgage stood at 6.77%. Trade tensions between Canada and the United States add uncertainty to a closely integrated market, although demand, inventories, sawmill output and capacity also influence prices.

German mills cannot pass through log costs

German sawmills face the opposite pressure in their raw-material market. The German Timber Industry Association, HDH, said softwood log prices had more than doubled compared with the 2021 base year, while softwood lumber prices remained only slightly above their 2021 level. Mills have therefore had limited scope to pass higher procurement costs to customers, although the association has recently received more reports of easing log prices. German producer prices for wood and wood and cork products were still 5.8% higher year on year in May 2026, according to the Federal Statistical Office. Softwood lumber rose 8.5%, while hardwood lumber increased 2.9%.

Operating indicators remain weak. HDH's business indicator for the broader timber industry improved from minus 32.2 points in June to minus 19.7 in July, but the association said this did not establish a sustained reversal. Sawmills recorded an average current-business assessment of minus 47.9 points over the latest three survey months, the worst result among the segments covered. The German Sawmill and Timber Industry Association had previously said 2025 production fell to its lowest level in ten years and warned that construction-lumber output could decline another 9% to 10% in 2026 if conditions remain unchanged.

Permits offer a delayed demand signal

Revenue and employment data underline the pressure. German timber-industry sales fell a nominal 7.2% year on year in May and were down 1.8% from January through May. Sawmill revenue increased 1.2% over the first five months, but HDH attributed the gain mainly to higher prices rather than volumes; May sawmill sales were 8.9% lower year on year. The number of recorded companies with at least 50 employees declined 4.0% to an average of 827, while employment fell 3.4% to 135,069. A company can disappear from this dataset after dropping below the employment threshold, so the decline does not necessarily represent closures.

German building permits provide an early but delayed sign of possible relief. Authorities approved 126,300 homes in the first half of 2026, up 15.1% year on year. Permits for homes in new single-family buildings rose 12.7% to 24,000, while the figure for apartment buildings increased 16.9% to 67,000. However, the comparison follows exceptionally low first-half totals of 106,700 in 2024 and 109,800 in 2025. Months can pass between approval, construction and timber orders. German mills therefore remain exposed to weak volumes and high input costs even as US futures signal lower North American lumber prices.