Homebuilder Confidence Edges Up After Tough Year

There were a few tiny rays of sunshine in the U.S. housing market as 2025 drew to a close. Housing is a major factor in forest products markets and therefore, in timber prices.

While the rays were tiny, they reinforced one another. The first was a continuing very slight decrease in interest rates. The 30-year Freddie Mac interest rate was 6.19%, down 0.50% from the beginning of the year. The National Association of Homebuilders expect the rate to remain essentially flat in 2026, predicting 6.17% for the year.

Meanwhile, the National Association of Realtors used the word “rebound” regarding next year in describing the projections of leading economists. But they also noted that “notable headwinds persist”.

Remodeling activity is another important factor in wood demand. Leading indicators for remodeling activity are projected to increase by a small single-digit percentage in 2026, according to the Harvard Center for Housing Studies.

“Upward trends in both remodeling permit activity and single-family home sales suggest that demand for home improvement will remain stable in the coming year,” says Rachel Bogardus Drew, Director of the Remodeling Futures Program at the Center. “Despite the modest pace, total homeowner remodeling spending is expected to reach $524 billion in early 2026, a new record high.”

These three important factors contributed to a 1% boost in the NAHB/Wells Fargo Homebuilder Confidence index. However, the index only reached 39 below the neutral point of 50 on a scale of 1-100.

Home builders, lumber suppliers, and timber owners were glad to see even these small increases after a difficult 2025.