The National Association of Home Builders (NAHB) examined new federal data that reveals shifting dynamics in U.S. lumber production and sawmill capacity, with important implications for the housing market. According to the Federal Reserve's revised G.17 Industrial Production report, sawmill output has remained largely flat over the past two years, though updated estimates now place production 7.5% above 2017 levels.

 

The revision also shows sawmill capacity peaking in the fourth quarter of 2024 at levels exceeding those seen in the early 2010s. Despite this long-term increase, capacity edged down 1.2% in the second quarter of 2025.

Utilization rates continue to trend lower as capacity outpaces demand, though NAHB notes a modest improvement. On a four-quarter moving average, utilization rose from 66.5% to 68.1% in the second quarter of 2025, while production increased 0.9% quarter over quarter. Still, output remains only marginally above 2023 levels.

"Lumber prices experienced declines as supply outpaced demand," the analysis notes, adding that mills have been "producing at a loss for much of 2025." Technological upgrades have also reduced employment levels without significantly affecting output.