U.S. sawmill and wood preservation firms maintained steady production and capacity levels throughout 2024, but capacity utilization rates declined to 65% in the fourth quarter on a four-quarter moving average basis. This decline reflects a continuing trend since 2017, where production capability has expanded, but real output remains lower than 2018, according to the National Association of Homebuilders (NAHB) analysis.
Capacity utilization rates, calculated as the ratio of actual production to full production potential, illustrate a growing gap between these two figures. The lower utilization rate stems from factors such as material shortages, order limitations, and labor constraints.
The NAHB estimated current U.S. sawmill production capacity by combining data from the Federal Reserve’s production index and the Census Bureau’s utilization rate. With U.S. firms operating below potential, imports continue to fill gaps in supply, particularly for softwood lumber.
According to Census international trade data, despite tariffs on Canadian softwood lumber, the U.S. remains dependent on imported lumber. The current AD/CVD tariff rate for Canadian softwood lumber stands at 14.5% but is projected to exceed 50% following a Department of Commerce review. Potential tariffs under the ongoing 232 investigation could further raise costs. These increased tariffs are expected to inflate construction expenses, worsening the U.S. housing affordability crisis.
