Prices Analytical Series
Recent trends in wholesale and retail softwood lumber prices

Canadian retail prices for framing lumber^{Note 1} rose 34% in 2018 compared to 2016 driven by a confluence of factors in the commodity markets. This increase contributed to the higher construction costs for new residential buildings observed in 2018 across many regions. Canadian wholesalers and retailers of lumber largely passed on cost pressures originating from commodity markets to consumers.

Retail prices for lumber reached multiyear highs in 2018

The average selling price for framing lumber (2-inch x 4-inch x 8-ft dimension) was up 34% in 2018 compared to 2016. This was due to rising purchase prices which increased 32% during the same time. Retailers largely passed on cost pressures from wholesalers and producers to consumers. From 2013 to 2015, relatively stable selling prices were recorded averaging $3.1 per unit.

Data table for Chart 1



Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1 Retailer's purchase Price, Retailer's selling Price and Retail gross margin, calculated using Canadian dollars and cents per dollar of sale units of measure (appearing as column headers).

	Retailer's purchase Price	Retailer's selling Price	Retail gross margin
	Canadian dollars		cents per dollar of sale
2013
January	2.17	2.86	23.7
February	2.24	2.95	23.5
March	2.35	3.03	22.3
April	2.41	3.12	22.7
May	2.37	3.12	24.1
June	2.31	3.07	24.4
July	2.26	3.03	25.0
August	2.27	2.99	23.9
September	2.27	2.99	23.8
October	2.28	3.02	24.4
November	2.28	3.05	25.0
December	2.31	3.05	23.9
2014
January	2.30	3.01	23.2
February	2.32	3.02	22.5
March	2.31	3.05	23.9
April	2.38	3.14	23.8
May	2.41	3.15	23.0
June	2.45	3.17	22.4
July	2.47	3.24	23.1
August	2.54	3.27	22.0
September	2.56	3.27	21.0
October	2.58	3.26	19.8
November	2.57	3.28	21.1
December	2.54	3.28	22.0
2015
January	2.56	3.31	22.4
February	2.55	3.29	22.0
March	2.60	3.31	23.2
April	2.47	3.29	24.7
May	2.42	3.23	24.9
June	2.39	3.21	25.1
July	2.39	3.23	25.8
August	2.41	3.23	25.1
September	2.38	3.21	25.8
October	2.32	3.18	26.8
November	2.33	3.17	26.2
December	2.32	3.17	26.6
2016
January	2.32	3.15	25.9
February	2.33	3.16	26.2
March	2.32	3.15	25.8
April	2.38	3.20	25.1
May	2.41	3.22	24.5
June	2.46	3.24	23.5
July	2.54	3.33	23.2
August	2.61	3.34	21.3
September	2.60	3.36	22.1
October	2.62	3.40	22.8
November	2.63	3.40	22.6
December	2.64	3.47	23.3
2017
January	2.68	3.57	24.2
February	2.73	3.60	23.4
March	2.81	3.75	24.0
April	2.92	3.78	22.3
May	3.00	3.86	21.9
June	3.04	3.91	22.0
July	3.10	4.01	22.5
August	3.12	4.07	23.0
September	3.11	4.10	24.0
October	3.09	4.14	25.0
November	3.12	4.17	24.9
December	3.11	4.20	25.6
2018
January	3.16	4.27	25.6
February	3.13	4.21	25.1
March	3.21	4.26	24.3
April	3.35	4.46	24.2
May	3.52	4.52	21.5
June	3.61	4.69	22.0
July	3.55	4.74	24.5
August	3.42	4.70	26.6
September	3.33	4.52	25.2
October	3.13	4.28	25.9
November	3.01	4.18	27.0
December	2.93	4.07	26.9
Source: Statistics Canada, Retail Trade Price Report (survey number 5135).

Selling prices of framing lumber peaked in July of 2018 averaging $4.7 per unit followed by a sharp decline in the latter half of the year. This decrease was mainly due to supply increases in the commodity markets and reduced demand for lumber in the US housing market.

From 2013 to 2018, retailers’ gross margins^{Note 2} for framing lumber fluctuated between 20 and 27 cents of every dollar of sale. Lower gross margins were recorded in early 2018 as the growth in purchase prices outpaced that of selling prices. Margins recovered in the second half the year as purchase prices declined faster than selling prices.

Lumber wholesale price trends mirror retail ones

Wholesalers also reported similar price trends as retailers. The average wholesale selling price of framing lumber (per thousand board feet) rose 33% in 2018 compared to 2016, consistent with the rise in purchase prices faced by retailers during this period. Wholesalers experienced rising producer prices (+34%), and passed the higher costs to retailers.

From 2013 to 2018, wholesale gross margins for framing lumber ranged between 6 and 14 cents of every dollar of sale with peaks in 2013, 2015 and 2018.

Data table for Chart 2



Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2 Wholesaler's purchase price, Wholesaler's selling price and Wholesale gross margin, calculated using Canadian dollars and cents per dollar of sale units of measure (appearing as column headers).

	Wholesaler's purchase price	Wholesaler's selling price	Wholesale gross margin
	Canadian dollars		cents per dollar of sale
2013
January	431.86	470.26	8.17
February	439.98	479.68	8.28
March	456.79	498.41	8.35
April	461.33	497.45	7.26
May	440.10	474.91	7.33
June	414.47	454.99	8.90
July	368.51	419.20	12.09
August	376.24	426.27	11.74
September	385.62	431.02	10.53
October	397.40	449.54	11.60
November	408.96	463.12	11.70
December	405.35	458.68	11.63
2014
January	423.97	476.81	11.08
February	431.55	479.22	9.95
March	436.12	486.58	10.37
April	414.88	463.32	10.45
May	410.64	462.49	11.21
June	411.77	459.96	10.48
July	424.89	472.60	10.10
August	437.17	484.65	9.80
September	463.99	515.38	9.97
October	443.05	491.13	9.79
November	402.35	439.11	8.37
December	400.21	449.42	10.95
2015
January	468.27	525.27	10.85
February	463.64	520.32	10.89
March	450.96	520.58	13.37
April	413.20	473.76	12.78
May	397.09	461.43	13.94
June	393.93	449.61	12.38
July	428.63	490.80	12.67
August	419.42	480.35	12.68
September	408.27	471.12	13.34
October	403.57	463.65	12.96
November	404.74	467.38	13.40
December	401.16	457.84	12.38
2016
January	395.59	447.75	11.65
February	396.39	456.33	13.13
March	411.66	470.07	12.43
April	412.83	464.17	11.06
May	421.27	474.02	11.13
June	441.10	483.96	8.86
July	468.69	512.05	8.47
August	470.97	513.99	8.37
September	464.97	505.09	7.94
October	453.80	491.45	7.66
November	450.16	487.71	7.70
December	452.39	493.57	8.34
2017
January	458.11	515.59	11.15
February	498.40	540.86	7.85
March	495.51	543.93	8.90
April	531.02	583.92	9.06
May	520.59	571.11	8.85
June	520.28	574.38	9.42
July	519.56	577.77	10.07
August	542.95	591.95	8.28
September	543.12	596.78	8.99
October	593.21	636.23	6.76
November	605.32	656.33	7.77
December	553.20	600.97	7.95
2018
January	594.53	645.48	7.89
February	617.39	672.62	8.21
March	611.46	686.21	10.89
April	626.02	699.83	10.55
May	683.67	755.23	9.47
June	702.01	758.89	7.49
July	657.66	707.83	7.09
August	590.32	643.74	8.30
September	549.07	599.55	8.42
October	474.88	542.92	12.53
November	471.35	537.86	12.37
December	417.79	481.28	13.19
Source: Statistics Canada, Wholesale Price Report (survey number 5106).

Growing demand in the US behind higher prices

Most lumber wholesalers and retailers surveyed cited changes in commodity markets as the main reason for price change. Increased demand for lumber, due to a growing US housing market, was the main driver behind the price uptick. The US accounts for 75% of the value of Canada’s softwood lumber exports.^{Note 3}

At the same time, Canadian producer’s ability to meet this demand was reduced amidst transportation constraints in the rail system,^{Note 4} wildfires in the summer of 2017 and 2018, and the adverse effect of the mountain pine beetle. Countervailing and anti-dumping duties imposed on Canadian lumber exports to the US in 2017 could also have contributed to the rapid growth in prices.

Prices started to decline in the summer 2018 as transportation constraints eased, bringing more supply to market, and as construction activity in the US housing market slowed down.^{Note 5}

Construction costs rise with higher lumber prices

Construction costs for new single-detached houses in Canada rose (+10%) from the first quarter of 2017 to the second quarter of 2018 driven in part by higher lumber prices.^{Note 6} Cost increases were observed in all eleven Census Metropolitan Areas (CMAs) surveyed for the Building Construction Price Index. According to the contractors surveyed, the increase in new building costs observed in this period were partly attributable to higher lumber prices. The growth in construction costs moderated in the second half of 2018 coinciding with the decline in framing lumber prices.