Jul 06, 2007. /Lesprom Network/. Current conditions in the housing market and excessive saw-milling capacity will cause lumber prices to remain weak this year and early in 2008, ITTO reported. More mill closures and curtailments will be needed to halt price erosion. Average lumber prices dropped by 16% last year and may slide by a further 7% to 8% this year. Prices may stabilize in 2008, in conjunction with improvements in the residential construction industry. On the positive side, the North American price decline has enhanced the price advantage against European lumber. North American lumber suppliers are again gaining competitiveness in international markets. The export business may now yield better returns than domestic sales. On the other hand, the slump in the US home building industry does not bode well for overseas lumber imports in the short to medium-term. Since the spring of 2006, exporting lumber to the United States has become increasingly unattractive for European saw mills as North American prices have plummeted to nearly half of those in Europe. A noticeable recovery in the American housing market and a price recovery is not expected before the first quarter of 2008. In 2006, European lumber supplies have been substantially lower than during the record year of 2005 and indications for 2007 point toward a further decline. Years of market share gains have been undone.