Lumber Prices Plunge, Raising Recession Concerns
NEW YORK – September 10, 2025 – A dramatic decline in lumber prices is sending ripples through the U.S. economy, sparking fears of a broader economic slowdown. After peaking at over $1,700 per thousand board feet in early 2022, lumber futures closed today at $360, a level not seen since the onset of the COVID-19 pandemic. This rapid price erosion is being interpreted by some economists as a “canary in the coal mine,” signaling weakening demand in the housing market and perhaps broader economic distress.
The falling prices reflect a confluence of factors, including slowing home sales due to rising mortgage rates, a decrease in new construction starts, and increased lumber production as mills ramped up capacity to meet earlier demand. While lower lumber costs could eventually benefit homebuilders and consumers, the speed and magnitude of the decline are raising red flags. The housing sector is a notable driver of economic growth, and a prolonged downturn could have cascading effects on related industries like furniture, appliances, and construction materials.”The speed of this decline is what’s concerning,” said Dr. Anya Sharma, an economist at the Peterson Institute for International Economics. “It’s not a gradual correction; it’s a freefall. That suggests a more fundamental shift in demand than simply a cooling off of the housing market.”
Historically,lumber prices have been a volatile indicator,prone to sharp swings based on seasonal factors,weather events,and trade policies. However, the current downturn is occurring against a backdrop of broader economic uncertainty, including persistent inflation and concerns about a potential recession. The National Association of Home Builders (NAHB) reported a significant drop in builder confidence in August, citing rising interest rates and affordability challenges as key headwinds.The impact of the price drop is already being felt by lumber producers. Several mills in the Pacific Northwest and Southern U.S. have announced production cuts or temporary closures in recent weeks, leading to job losses in rural communities. While some analysts predict the market will eventually stabilize, the near-term outlook remains bleak, with further price declines possible as the fall building season approaches.
