Slower Lumber Markets Forecast in 2006 Following Record Demand Year.

PORTLAND, Ore. -- The string of four consecutive years of record lumber demand should end in 2006, as the red-hot home construction market begins to cool, according to a new forecast released by Western Wood Products Association.

Preliminary estimates show lumber demand reached a record 63.9 billion board feet in 2005, rising 3.4 percent from the previous year. For 2006, WWPA forecasts lumber demand to slip a modest 2.1 percent to 62.6 billion board feet.

All of the decline in lumber demand will come in residential construction. WWPA predicts housing starts will total 1.93 million units in 2006, down 6.3 percent. Last year, a record 27.8 billion board feet of lumber was used in housing construction, or nearly 44 percent of total lumber demand.

Lumber use in the other markets -- repair/remodeling, non-residential and industrial -- is forecast to be slightly higher this year as the American economy continues to grow.

U.S. lumber production is expected to decline this year, slipping 2.5 percent. Production by Western mills should total 18.8 billion board feet, down from 19.3 billion board feet produced in 2005. Southern mills are expected to produce 18.5 billion board feet this year, down 2.4 percent.

Imports will likely gain market share in 2006. Canadian lumber shipments to the U.S. are forecast to decline, but only by 1.7 percent to 21.2 billion board feet. That volume would be the second highest on record.

European lumber shipments nearly doubled to 2.1 billion board feet in 2005. For 2006, lumber from Europe is forecast to rise to a record 2.3 billion board feet.

Shipments from American lumber mills to foreign destinations are expected to rise for the second year in a row. U.S. lumber exports rose 11.4 percent in 2005 to 897 million board feet. This year, export volumes should increase to 915 million board feet.

Final lumber industry statistics for 2005, including production by state in the West, will be released by WWPA later this year.

Western Wood Products Association represents lumber manufacturers in the 12 Western states and Alaska. Based in Portland, WWPA compiles lumber industry statistics and provides business information services to mills. The Association also delivers quality standards, technical and product support services to the industry.