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

Release date: September 3, 2019

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Canadian retail prices for framing lumberNote 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.

Chart 1 Average Retail Prices

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

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 marginsNote 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.

Chart 2 Average Wholesale Prices

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

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.


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