US sawmill capacity fell 1.2% in the Q2 2025 compared to the Q1, according to an analysis of Federal Reserve and Census Bureau data. However, a revised historical series now indicates current production is 7.5% higher than in 2017, and capacity remains 4.5% above its 2023 level, as reported by the National Association of Home Builders (NAHB).
The sawmill utilization rate, measured on a four-quarter moving average, increased to 68.1% in the Q2 2025 from 66.5%. Over the same period, production rose 0.9% but remains only 0.3% above 2023 levels. This marginal growth in output has occurred alongside continued declines in sawmill employment, a trend attributed to technological investment improving worker productivity.
The recent quarterly decline in capacity follows a period of excess supply that drove lumber prices down through much of 2024 and 2025, leading to mill curtailments and closures. Despite import duties of nearly 45% on Canadian softwood lumber, US prices remained low at the end of 2025 as supply outpaced waning housing construction demand.
The outlook for 2026 remains uncertain, with potential for price volatility if current production losses lead to significant supply reductions.