Three Northeastern lumber distributors shared a common thread regarding the state of the industry through the final quarter of 2023.
Each source also had a unique perspective and regional insight into other issues they face in their markets.
According to each Softwood source, high interest rates for new home buyers and the post pandemic economy resulted in slow lumber sales for the final months of 2023. The annual holiday season decline was also cited by the sources.
At the time of this interview, a New Jersey lumber supplier said, “the market was in the doldrums” during the final quarter of 2023.
He anticipates that the market will improve by the second quarter of 2024.
“The traditional market is up in the Spring,” he said. “But we haven’t had a traditional market. The first quarter of 2024 is going to be quiet and interest rates will still be high. But I have no idea.”
A Massachusetts lumber distributor said he is taking everything “day-by-day going forward.”
“During the pandemic,” he noted, “interest rates were way down. Now we are back to reality.”
According to a New Hampshire lumberman, the slow market has been partially caused by hesitant first-time homebuyers that are worried about high interest rates.
“If you have a lumber yard,” he said, “and a heavy amount of their business is going to builders that are building homes for first-time house buyers, they are seeing the most acute slow-down because there is an increase in mortgage rates.
“They have the tightest debt-to-income ratio,” he continued. “Those are the ones that are most dramatically affected.”
Low interest rates during the pandemic are still on the minds of many new house buyers who were unwilling to settle for higher rates in 2023.
“I am prepared to change my opinion of the market every day,” the Massachusetts source said referring to the unpredictable nature of the building market.
“For buyers and customers,” he said, “there is a lack of confidence in the economy.”
Taking the entire scope of the timber industry into consideration, the New Hampshire source said that the pandemic resulted in anomalies within the business.
“In our industry,” he said, “if you take the sawmill, the wholesalers, the customer and then the builder, usually someone is making money and someone is losing money. It is rare that everyone is making money. When we went through COVID, everyone was making money. I’ll even put the truckers in there. Right now, as it filters out, currently the suppliers are breaking even or not making money on some species. But the lumber yards are still making money, along with the builders.”
The Massachusetts source said that his region faced some unique dilemmas in 2023.
The Northeast market, which imports a large amount of high-quality Spruce, Pine and Fir from Europe, was flooded with overseas lumber.
“The problem was that the Euro lumber had come in to port a year ago,” he said. “So, we were getting a lot of moldy lumber. The first stuff in was the last to go out. So, the lumber we were getting was moldy.”
The source called it “one of the most significant things in the market.
“It is all based on greed,” he added. “It was just too much and some of it ended up in Boston where they don’t normally keep a lot of it, and they rented a parking lot and put it there. We had some units come in and we started looking at the dates and they were a year old.
“The importer says, ‘it’s tarped up,’” he added. “They blamed the forklift drivers for ripping the tarps. The mill guys would blame it on the yard guy for not rotating the stock. But nobody told them that they had ship-after-ship coming. They just kept piling up the wood.”
The weathered stock was slowly sold due to “pent up demand.”
In New Hampshire, a lumber distributor who works primarily with Southern Spruce, Douglas Fir, Hem Fir and Southern Yellow Pine, noted that the housing market in the southern states dictates much of the business.
“New houses are still being built in the south,” he said. “But it is slower than I would have hoped for.”
He added that the housing market in the Northeast region lacks new construction.
“The Northeast is the oldest housing market in the country,” he said. “The houses were built in the 1700 and 1800s. There isn’t space for new housing.”
He remains optimistic that the timber economy will soon improve.
“Things are better than you read in the newspaper, as far as the overall economy,” he concluded. “But we’ll see what happens in the first half of 2024.”