U.S. Sawmill Output Continues to Shrink

The lumber industry in the United States is showing signs of tightening capacity, a trend that could have implications for home builders if demand accelerates in the future.

According to the Federal Reserve's G.17 Industrial Production report, U.S. sawmill production declined in the first quarter of 2026, marking the second consecutive quarterly decrease.

On a four-quarter moving average basis, production slipped 0.4% from the previous quarter, although it remained 1.7% above the same period last year. Overall, sawmill output has been largely unchanged since 2023 after the sharp production gains that followed the pandemic.

While production has edged lower, the industry's utilization rate increased modestly to 71.8%, up from 71.2% in the fourth quarter of 2025. The higher utilization rate is likely an indication of declining sawmill capacity given the production decline in the first quarter. Based on the Census Bureau and Federal Reserve data, NAHB estimates that U.S. sawmills' full production capacity fell 6.0% over the year.

Lumber prices moved modestly higher during the first quarter. Softwood lumber prices — a key driver of residential construction costs — increased 6.1% from the previous quarter. However, softwood lumber prices were 3.8% lower than a year prior.

NAHB Director of Tax and Trade Policy Analysis Jesse Wade provides more detail, including hardwood lumber pricing and sawmill employment trends, in this Eye On Housing article.