This year has been relatively stable, with lumber and timber prices mostly flat to slightly down, primarily due to the overall slowing economy, especially as it relates to the housing market, said Domain Timber Advisors, the Atlanta-based company, in its market review. The bright spot in the second quarter was the first time in 18 years that pine sawtimber pricing did slightly increase on average (+$0.20) Q/Q, according to TimberMart-South data.
“We expect timber prices to remain relatively stable, continuing a flat to slightly down trend for the remainder of the year. We anticipate most pricing moves to come from standard seasonal pressures related to harvest area accessibility”, said Scott Reaves, Director of Forest Operations at Domain Timber Advisors.
Domain does not anticipate any unusual material timber pricing moves related to housing demand or weather. Based on market data, company continue to expect a small retraction in housing and timber pricing for the remainder of the year. A surge in economic activity and housing construction is expected from early 2024, driven by pent-up housing demand and low inventory levels.
“We are seeing in the data, that for the quarter and thus far in 2023, higher interest rates have slowed overall economic activity and increased mortgage rates, making housing less affordable for many prospective buyers”, said Reaves.
He noted that one of the main factors to pay attention to is the availability of labor for logging, trucking and carpentry. These groups are critical to a healthy wood products industry. COVID effects illustrated this point clearly as labor shortages contributed significantly to the run up in lumber prices.
Another is the focus on natural capital solutions available from timberland ownership and investment. “We believe timberland is a versatile asset class that can provide attractive, risk-adjusted economic returns, while responsibly producing essential raw materials that address the world’s needs and meet sustainability, climate and biodiversity-related goals”, said Reaves.
Domain Timber Advisors is a subsidiary of Atlanta-based Domain Capital Group that provides comprehensive private investment management services, through its registered investment advisor subsidiaries, to institutions, public and private pensions, corporations, foundations, endowments, and high-net-worth individuals. Domain Capital Group manages approximately $8.5 billion in total assets.