Lower mortgage rates, not cheaper lumber, are key to driving more construction and renovations, lumber expert says
There have been consistent signs that the housing market is poised for a rebound. There is pent-up demand, millennials at peak buying ages, rising household formations, and home equity at record levels. While this all should be leading to surging construction and renovation numbers, a lumber expert said the reality is much different.
Russ Taylor has been tracking North American lumber markets for decades and runs Russ Taylor Global, a wood products consultancy. The data, he said, keeps telling a different story.
"All that theory doesn't matter," Taylor told Mortgage Professional America. "If things are unaffordable and there's uncertainty and consumer confidence is weak, then nothing happens. People might be saving more money if they're not spending it, but everyone's worried about jobs and everything else, so they're not spending, and they're saving for a rainy day."
Tailwinds are very slow
The number Taylor keeps coming back to is lumber consumption. In 2016, the country consumed roughly 50 billion board feet. In 2025, the number was almost exactly the same. Ten years of demographic tailwinds, rising equity, and persistent housing shortage arguments, and consumption has not budged.
"It's about 50 billion board feet in 2016. And in 2025, we're at 50 billion board feet," he said. "It's been flat in the US for 10 years."
Housing starts have been declining every year since their 2021 peak, and Taylor expects 2026 to continue that trend. Repair and remodeling, which accounts for roughly 40% of US lumber consumption, has been similarly stagnant since the COVID period.
"You would think they'd do more repair and remodeling," he said. "But that hasn't really happened either. It's been relatively flat since COVID. And the outlook for next year is for a bit of a dip toward the end of the year."
The tailwinds are real, Taylor said. He is not dismissing the demand arguments. He just does not see them overcoming the affordability and uncertainty headwinds at anything close to the speed the forecasters keep predicting.
"There's pent-up demand of three to four million additional housing units," Taylor said. "Millennials are reaching their peak buying ages. There's improving household formations. Repair and remodeling activity is high following the first year of purchase of a used home. And there's purchasing power with rising home equity. All these things should be really, really good for home starts, repairs, and remodeling. And yet all that just washes through. They're about one mile an hour, and they need to be about 20 miles an hour."
What would fix the market
Part of the problem is the rate lock-in. Existing owners with 3% mortgages are not moving up because they do not want 6% rates. That keeps inventory off the market, keeps buyers on the sidelines, and kills the renovation cycle that typically follows a home purchase. For brokers, it also means the pool of motivated buyers stays smaller than the demographic data alone would suggest.
Cheaper lumber is not the fix, Taylor said. A $100 swing in lumber prices is meaningful to framers and subcontractors on thin margins, but it does not change what a buyer can afford.
"A hundred-dollar increase in lumber prices isn't going to upset the cost of a home," Taylor said. "But a 1% drop in mortgage rates will have a huge impact on affordability."
Bringing rates down requires getting inflation under control, and that means resolving the pressures driving it. Taylor said oil prices ripple through the entire supply chain from logging to transportation to distribution. Geopolitical stability in the Middle East would help. So would reduced trade uncertainty.
"If you can get rid of the blockade in the Strait of Hormuz and get the oil flowing, that's going to eventually stabilize global economies and stabilize trade flows, and then that's going to allow mortgage rates to come down," he said. "If you can get those mortgage rates down to 5.5% or lower, you're going to get some traction going."
Every year for the past four years, Taylor and his colleagues have predicted the second half would be better than the first. Three of those years, it was not.
"For the last four years, my colleagues and I have been talking about the first half of the year doesn't look so good, but the second half of the year looks better," he said. "Well, the second half of the year, the last three years have been worse."
The supply side is at least moving in the right direction. North America has lost roughly eight billion board feet of capacity since 2023 while adding about three billion in new southern US mills. When consumption does return, the conditions for a recovery will be there. Taylor just cannot tell you when.
"Things will get better. It's just a matter of when," he said. "And next year should be better than this year. That's the old story."
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This article is part of our Monthly Spotlight series, which in June focuses on residential and commercial construction. Full coverage can be found here.
