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Goal: Deliver Benefits to the Public Connecting future residential construction and lumber demand in the United States

Director’s Choice
New housing construction

U.S. single-family house construction typically involves softwood framing lumber and structural wood-based panels, especially oriented strand board. (Forest Service photograph by Jeffrey P. Prestemon)

Introduction

Housing starts can be simply predicted with information on the rate of overall economic growth, and such a prediction informs estimates of future softwood lumber consumption in the U.S.

Summary

Future forest conditions in the U.S. depend in part on timber harvest rates, which are a function of overall demand for wood in construction. For the 2020 RPA Assessment, we developed a simple yet highly accurate model of housing starts as a function of aggregate inflation-adjusted (real) economic growth, recent start activity, and mortgage delinquency rates, along with similarly simple models of softwood lumber demand models as a function of current starts and economic growth. Given alternative assumptions about future economic growth in the U.S., we can better understand how a range of possible economic growth rates will lead to a range of construction rates and softwood lumber consumption rates. At recently observed real economic growth rates of 2.4% per year, starts would average about 1.2 million per year, while growth of 3% would lead to starts averaging 1.3 million and growth of 0% would have starts at 0.9 million. Softwood lumber consumption would grow at about 0.5% per year if economic growth were at recently observed rates, increase at 1.3% per year if real economic growth were 3%, and would decline by 2.5% per year if real economic growth were zero. Given that sustained long-run economic growth is unlikely to exceed 3.5% and more likely to average less than 2% over the coming decades, softwood lumber consumption growth will average less than 0.5% per year.