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By Andy Johnson, Hardwood Market Report
EASTERN U.S. HARDWOOD sawmill production sank to the lowest level in at least 65 years in 2025, according to HMR/Fastmarkets estimates. While December production estimates were not finalized at the time of this writing, the annualized production rate through November was just 4.12 billion bd. ft. (BBF)—down 16.5% from 2024, 45.7% from the pre-Covid 2019 level, and 67.3% from the 1999 record of 12.62 BBF.
The U.S. hardwood industry is a poster child for the economic truism that supply reacts to and eventually conforms with demand. Record low production in 2025 did not happen in a vacuum but was the result of a downward spiral in hardwood consumption (demand) across most major grade lumber and industrial product markets over a quarter-century.
The Consumption Spiral
HMR/Fastmarkets estimates show that total consumption of hardwood lumber by domestic markets in 2025 was 2.9 billion bd. ft. lower than in 2019 and a staggering 7.5 BBF lower than the peak 1999 total. Between 1999 and 2025, consumption by the U.S. pallet and furniture sectors declined by 2.7 BBF and 2.4 BBF, respectively, with sharp reductions also occurring in the moulding/millwork (-985 million bd. ft. (MMBF), cabinet (-949 MMBF), and flooring (-866 MMBF) sectors.
While a host of factors contributed to the downward spiral in consumption, two stand out. First, U.S. imports of secondary wood products exploded, with wood furniture imports leading the way, followed by solid and engineered flooring, then cabinets. Second, substitute wood and non-wood products captured larger shares of key markets. For example, raw material usage by the wood pallet and container industry flipped from 80% hardwood and 20% softwood to the reverse. Meanwhile, MDF usage took off in the cabinet industry, and luxury vinyl tile gained significant traction in the residential flooring sector.
All the while, the U.S. hardwood industry never implemented a sustained promotion program to convince consumers, designers and specifiers of the intrinsic value of real American hardwood, which could help fight off imports and competing products, including those that mimic hardwood.
During much of the 2010s, rapid growth in U.S. exports of hardwood lumber mitigated the ongoing contraction in domestic consumption. Between 2010 and 2018, exports climbed from 1.07 to 1.89 BBF, driven almost entirely by surging Chinese demand. However, a sharp downturn in Chinese housing markets combined with the outbreak of a U.S.-China trade war during the first Trump Administration caused an uneven retreat in exports. By 2025, exports were almost 800 MMBF lower than in 2018.
The Supply Response
Notwithstanding the post-pandemic sugar high in demand, markets are demanding much lower volumes of U.S. hardwoods than in the past. Furthermore, sharply higher operating costs have made profitability elusive for hardwood industry operations. Amid these circumstances, sawmills and concentration yards have less incentive to operate.
Not surprisingly, the last three years brought a flurry of closures throughout the hardwood supply chain, particularly in the sawmill sector. And, unlike the past, few mills are being acquired by other companies for continued operation; many are being dismantled and the property abandoned or converted to other uses. Other sawmills have switched part or all of their production to softwood, particularly in the softwood-heavy Southeastern U.S.
In 2025, lackluster U.S. new home construction and uncertainty about global trade caused hardwood businesses of all kinds to be cautious. The uncertainty has been harmful to the hardwood supply stream.
Despite record low grade lumber and industrial product output, most hardwood items are in adequate supply in early 2026. That said, historically low production is upholding prices for most items, including those in weak demand.
What If...?
At HMR, our editors are frequently asked: “What is the production capacity of the U.S. hardwood lumber industry?” While a specific number is difficult to discern, there is no doubt that production capacity is much lower than in the past. The question also arises about how long it would take for the industry to respond to a substantial increase in demand. In the past, the supply response was typically rapid. However, that may no longer be the case. After years of contraction, industry members would welcome the opportunity to respond to increased demand.
– Andy Johnson is editor of the Hardwood Market Report, Memphis, Tn., a division of Fastmarkets (www.hmr.com).
