Hardwood Market Outlook: Why Low Supply Could Drive Prices Up in 2026

Over the past 18 months, the hardwood lumber market has faced significant headwinds. Demand has been soft, driven by a slower economy, high interest rates, and ongoing tariffs. These pressures have taken their toll, with many mills closing and overall production likely down by 20% or more since 2023.

Adding to the challenge, this past summer brought unusually wet weather, particularly in the northern regions, which kept log inventories at consistently low levels. Both air-dried and kiln-dried lumber supplies remain only at medium to low availability.

What’s Ahead for the Next 12 Months

Looking forward, the potential for change is on the horizon. If interest rates drop as many predict, and consumer demand strengthens alongside the broader economy, the supply chain may struggle to keep pace. Unlike in 2021—when rising demand was met with well-stocked inventories—the current supply levels are far too lean to absorb a sudden surge in demand.

The result? Prices are expected to climb. In fact, by the second quarter of 2026, certain species could see increases of 30% or more. While the exact pace of these changes is hard to predict, the direction of the trend seems clear: tightening supply and rising prices.

Guidance for Furniture Producers

For local furniture manufacturers and retailers, these market dynamics carry important implications. Here are a few steps worth considering:

Begin gradual price adjustments. Raising prices slowly over the remainder of 2025 and into early 2026 can help prepare your business for the increases ahead.
Limit long-term price commitments. We recommend keeping customer orders within a 45–60 day window. This reduces the risk of being locked into pricing that doesn’t reflect rising material costs.
Stay flexible. While the market signals point toward higher prices, no one can predict the future with certainty. External factors—economic, political, or environmental—could shift the outlook quickly.

Final Thoughts

The hardwood lumber market is entering a period of potential volatility. With supplies already strained and demand poised to recover, businesses that prepare now will be better positioned to protect their margins and remain competitive. While no forecast is foolproof, the signs suggest that proactive planning over the coming months will pay off.