The American Wood Council, citing forest supply consultant, Forisk, reported that North American softwood sawmill capacity increased by 1.4 billion board feet in the last year. Most of that increased capacity—1.1 billion board feet—was from manufacturing in the U.S. South. The entire wood products manufacturing sector continues to produce at the highest levels since the Great Recession.
Many wood products companies have announced significant investments to expand the capacity of existing mills, however, lead times to get the new equipment remains long. In some cases, machinery is back-ordered up to 24 months—potentially extending the usual 12 to 24 months it would take to complete these types of projects. Manufacturing expansion projects are a long-term solution that will support increased capacity, but not until 2022 at best.
Home demand has only increased during the pandemic and builder confidence has been above 80 for the last nine months, with a rating of above 50 indicating positive conditions. Homes are going under contract at a faster rate than they are listed for sale even though new home listings are up 19.1% over last year. Permits for single- and multi-family projects were up 25.3% and 20.4%, respectively. The unprecedented demand still exceeds current supply.