After a more challenging year for the lumber industry than many expected — marred by political shocks, tariff concerns, weather disruptions and affordability fears — 2026 may prove to live up to the classic adage around expectations: the only certainty is uncertainty.
Industry watchers are anticipating echoes of the instability of 2025, but with a twist; this time, everyone knows it’s coming.
“I think it will be just as uncertain, and we’re going into the new year knowing that it’s going to be uncertain,” says Brent Brownmiller, Vice President at Gillfor Distribution. “Last year we went in on January 1st thinking, ‘Oh, it could be a pretty good year’ — housing starts were expected to be better, pricing was expected to be better.”
Photos courtesy of Gillfor Distribution
This year, he says, the mood is different: “We’re going in knowing it’s going to be uncertain, and therefore people are going to just sit there and go [‘let’s hold our breath a little bit and just wait and see how the year kind of happens.’].”
2025 Expectations Clash with Reality
Brownmiller points to the events of January 6, 2025, and the looming tariff threats that followed as key drivers of unpredictability, softening consumer confidence throughout the year. U.S. affordability challenges have also resulted in too much lumber for takeaway, pushing the market toward
historical lows.
It’s a sentiment echoed by Brendon Hiller, General Manager of Commodities at Taiga, who was surprised by what he called an overall lack of demand in North America. “Going into 2025, the market was very optimistic. That changed very quickly with a new U.S. government and the threat of tariffs — this put significant uncertainty into the market. The word ‘uncertainty’ remained a key topic throughout 2025.”
Stephen Marshall, Vice President at Doman Treated Wood, notes that in addition to trade barriers, the market faced several significant challenges. “A very slow start to the year, challenging weather and a huge amount of uncertainty created by disrupted trade with the USA and China led to a slowdown in business and building activity.” Because of this, he says, 2025 was a “cautious year” that panned out worse than expected. “Poor early weather and the massive trade upheaval were a blanket on the entire market, especially Ontario.”
Photos courtesy of Doman
Photos courtesy of Taiga Building Products
Still, even amidst all this marked unpredictability, tariff exposure and policy volatility, Castle dealers were able to navigate the turbulence relatively well, says Kelvin Johnston, Senior Buyer at Castle Building Centres Group, focused on commodity lumber and panels. “Our dealers had a strong year,” he says, “but that was in spite of the conditions, not because they were easy.”
He attributes this to disciplined inventory management, strong local relationships and a focus on core categories. “The market was challenging across the board, but our network stayed steady and made good decisions.”
Photos courtesy of Taiga Building Products
The Forces Shaping 2026
With no resolution on tariffs or trade tensions, they remain a wildcard heading into 2026 and continue to shape the outlook for the year ahead — and perhaps beyond.
Consumer confidence remains fragile heading into 2026, shaped by the same tariff-driven uncertainty that defined last year, Brownmiller suggests, adding that “there’s been no policy that has changed the minds of anybody.”
Actual confusion of tariffs related to the softwood lumber dispute also continues to shape the market, Hiller suggests. Doman’s Marshall adds that the problem has longevity beyond the current U.S. administration, “Softwood lumber problems existed before Trump, and will continue with or without him unless there is some negotiated settlement.”
Perhaps even more important than U.S. policy on Canada, its effect on U.S. housing, confidence and buying trends may set the stage for the year, or years, to come.
“It’s not going away any time soon,” Johnston says. “We have three more years of the current U.S. Administration, and that’s something we’re going to have to live with. My question is: how bad will the U.S. economy get?”
Photos courtesy of Gillfor Distribution
That said, Canada, he suggests, is in “a good spot,” reminiscent of the 2009-2010 economic collapse. “We survived that and will again as long as we can keep people employed.”
Marshall is cautiously optimistic. While he expects more trade and economic uncertainty, he sees interest rates and inflation trending down, and notes that overall employment in Canada remains solid. He also points to new federal leadership under Carney, which he views as more pro business than the previous government, though he cautions that industries such as auto, steel and aluminum will feel the drag of ongoing trade disputes.
For those in lumber production, whether employment holds up is, of course, a real concern. Weak takeaway and affordability pressures — particularly in the U.S. — continues to suppress demand in 2026, increasing curtailments and potentially making some permanent. It’s a trend that will create what Brownmiller describes as “retirement villages” — communities hollowed out as mills close and jobs disappear.
Everyone predicts more mills shuttering due to a confluence of economic pressures, including low takeaway, low pricing and uncompetitive operating conditions, which they say may lead to not being able to supply demand when it picks up.
This has Johnston predicting an eventual run on lumber, once demand outpaces the curtailed supply, but who’s to say exactly when?
One thing is clear to him: the extremely low prices the market is seeing today might seem like a blessing to some, but they aren’t good for contractors, dealers, wholesalers or suppliers.
“While consumers might like low prices, they are not good for the industry at all levels. Flat markets are hard on the entire supply chain,” Johnston says. “Retailers and contractors don’t want prices to be so low; it means lower margin dollars. When there’s no upswing or downswing, it becomes incredibly competitive.”
Photo courtesy of Gillfor Distribution
Photos courtesy of Taiga Building Products
Regional Dynamics at Play
Of course, a country as large as Canada saw 2025 play out — and will see 2026 shape up — differently from region to region. But while trends may not repeat from province to province, they will certainly rhyme, shaped by the same macro economic pressures.
Brownmiller notes that Ontario finished 2025 “pretty decent” and even started that year “terrifically,” but the outlook for 2026 remains tied to U.S. manufacturing. With so many communities dependent on auto sector employment, consumer confidence is easily shaken. Workers worried about job security are less likely to take on renovations, upgrades or new home purchases, making Ontario’s 2026 trajectory highly sensitive to U.S. economic signals.
Photo courtesy of Taiga Building Products
“Economic activity in certain regions (Ontario) is being severely affected by the current trade disputes with the U.S.A. and China,” Marshall says. Johnston notes that Ontario builders stopped building a few years ago, especially on condos. However, he adds, “I think there is going to be a change in housing overall — albeit not necessarily in 2026 — as we see it moving forward, where the demand for a single-family home is going to be a little bit higher.”
Meanwhile, on the West Coast, BC is facing some of the steepest structural hurdles in 2026. Brownmiller points to higher log costs and provincial stumpage policies that leave BC mills uncompetitive compared to Alberta and U.S. producers. (All of which contributes to the curtailments Brownmiller and others expect.)
It’s a sentiment touched on by Hiller: “Alberta stood out as the strongest demand market, BC, and specifically the Okanagan, saw a sharp decline in demand. We expect demand in the Okanagan to remain challenging with multifamily overbuilt, the rental market very depressed and out of province taxes on vacation properties to remain; these will all make for a challenging housing market in the Okanagan.”
Photo courtesy of Doman
Photo courtesy of Gillfor Distribution
Photo courtesy of Taiga Building Products
OSB production in Alberta and Saskatchewan remains heavily dependent on U.S. multifamily housing starts. With U.S. affordability still strained, Brownmiller warns that Prairie mills — often located in small, fibre adjacent communities — face a heavier risk from curtailments. That said, Johnston notes that “real estate remains strong in some regions, like Alberta,” and he expects renovations and multi dwelling builds to be key demand
drivers there.
“Housing was quite regional in Canada. Quebec and Alberta were strong, other provinces lagged,” Marshall echoes.
Nationally, he adds, “Canadian sawmills certainly want more Canadian customers, but dealers were more cautious in their buying patterns with bad news and uncertainty being reported in most mainstream media. Most dealers ran their inventories very low by the end of 2025.”
Photo courtesy of Taiga Building Products
What Contractors Should Watch in 2026
Marshall notes that early orders in Canada have been quite strong with lower prices, but the market will need to see takeaway and replenishment in the warmer months.
He urges contractors to “watch housing strength in the U.S. — if housing kicks up, U.S. lumber demand will increase, pushing up lumber prices.” He adds that U.S. fundamentals are strong: 30-year-mortgage rates back under 6% now, inflation under 3%, high employment, and government spending as a percentage of GDP is dropping. GDP growth is being forecast by many to rise above 5%, he says, with huge Capex projects, taxes dropping for businesses and taxpayers, and closed borders.
“The USA seems poised for growth,” he says. “This will help push up commodity pricing — such as lumber and metals — in Canada.”
Despite soft pricing this year, Brownmiller says this is not the time to adopt the usual downturn playbook of buying in January and selling in July. With carrying costs, uncertain demand and no sign of an early year rally, he cautions contractors against front loading inventory and urges them to stay nimble.
With 2026 starting with lean inventories, many suggest this could be a year of cautious, hand to mouth buying. Through 2025, Hiller says lumber yards bought “only what they needed,” as speculation fell out of the equation entirely and consumers remained cautious despite historically low prices. Marshall adds that sawmills want more Canadian customers, but dealers remain hesitant.
Photo courtesy of Taiga Building Products
With mill closures and cautious lumber yards, contractors can expect supply to be lean in 2026 — a double edged sword that keeps prices soft for now but can turn sideways on a dime if demand shifts.
Marshall adds that the post COVID supply chain has conditioned dealers and contractors to expect next day or same week replenishment — a level of service that could change quickly if building activity strengthens.
Brownmiller also cautions contractors not to fixate solely on lumber prices. While contractors spend a lot of time tracking commodity costs, he notes that homeowners often view lumber as a small part of the overall project budget — meaning broader affordability pressures may influence demand more than the price of studs or sheathing.
But it’s not all doom and gloom. Hiller says that while R&R has been slow the past three years, it’s expected to pick up in the latter half of 2026 as more people stay in their homes and invest in upgrades. He says contractors should cover committed projects early to avoid risk from low supply or a run on pricing.
That bodes well for some dealers and contractors, Johnston says, also predicting an uptick fueled by homeowners spending to improve their abodes. “For most of my stores, the majority of their business is not around new home builds but renovations, new decks, fences… I think that’s what’s going to make it another good year for Castle stores.”
The market may be cautious, but preparation, problem solving and flexibility are already part of every good contractor’s DNA. Those who adjust their planning and buying to shifting demand — and stay informed through strong relationships with customers and the supply chain — will be better prepared for whatever 2026 brings, and ready to build through it. —
