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With record numbers of homelessness, a cost-of-living panic and a prevalent housing crisis, North America has rarely seen such uncertainty when it comes to the housing market. As the scramble for stability continues, could we see mass timber and cross-laminated timber (CLT) step into the void?
The last three years have lumber traders and forecasters alert, with unprecedented boom-and-bust cycles in wood products prices and 2023 appears to see a continuation of this challenge. New home sales in the US have fallen short of expectations by 20-30% since the beginning of 2022 as prospective buyers struggle to afford homes amid high mortgage rates and near record-high home prices.
Things have been looking gloomy for US single-family construction for the last two years. Mortgage rates have climbed above 6% as the Federal Reserve has raised rates to fight inflation and this year some analysts believe housing demand could cool further if rates continue to rise.
The demographic breakdown of first-time buyers looks far from promising. Headship rates are low because the share of young adults living at home has been disproportionately high. It peaked at its highest level since at least 1983 in 2020 as the pandemic resulted in major job losses, particularly among young adults and gig workers. This level will remain high partly due to affordability issues that currently show no sign of getting better.
Another symptom of the housing challenges the country faces is the impact on home sizes. US housing sizes declined year-over-year (2021-2022) in most regions, according to recent data from the US Census Bureau. Builders are responding to buyers who are still seeking affordable entry-level homes in a difficult climate.
Mass timber buildings are built from engineered wood, which is often lighter and faster to construct. The construction elements arrive at the building site and are installed almost immediately onto the structure.
This makes them more cost-effective to produce (less labor and energy costs), potentially increasing the chance of keeping prices down for the home buyer. Unlike traditionally constructed tall buildings made from concrete and steel, mass timber also provides natural insulation that keeps energy bills down.
Originating in Europe, this mode of construction is slowly growing in popularity across North America. Favored for their nature as wood products, they are often regarded as an environmentally friendly substitute for other materials with heavier carbon footprints.
While concrete and steel create carbon dioxide in their respective manufacturing processes and offer no recourse post-manufacture, mass timber captures and stores carbon in the end product while promoting a renewable building. Mass timber is a sustainable building option provided that forests are effectively managed and sustainable harvesting techniques are employed.
The most common type of mass timber is cross-laminated timber (CLT). CLT panels were developed in the early 1990s and are regarded as the most robust and malleable form of mass timber. They can be used for a range of housing assets, such as floor, roof, and wall panels. CLT is usually created using Douglas Fir, Spruce-Pine-Fir or Black Spruce.
Until recently, there were stringent regulations that limited the construction of mass timber buildings. Once limited to five or six stories, efforts to change building codes now allow buildings constructed of mass timber to reach much loftier heights, significantly increasing the use of wood as a construction material.
In Bentonville, Arkansas, a new Walmart headquarters is being constructed of mass timber. Comprised of more than 30 buildings that will sit on 350 acres, the campus will utilize approximately 1.7 million cubic feet of lumber, which is equivalent to 20.4 million board feet. That volume of lumber could build 1,275 homes that are 2,000 square feet in size.
In addition to the construction of new tall buildings, mass timber is being included in updates of various structures – airports in Kelowna, British Columbia, and Portland, Oregon, are recent examples.
Currently, the world’s tallest mass timber building, at 25 stories high, is being constructed in Milwaukee, Wisconsin. According to the Milwaukee Journal Sentinel, the building process for the structure has been estimated to use 90% fewer vehicles, 75% fewer workers, and be finished in one-quarter of the time it usually takes to build that same structure using traditional materials.
According to a press release from Western Forest Products Inc., there are currently 1,300 mass timber projects either built, being constructed, or in the design phase in North America.
There are a small volume of mass timber developments but they are growing fast, with a lot of excitement and upside potential for the industry, especially in an environment where capturing carbon is becoming more of a priority.
Oregon appears to be a strong proponent of CLT construction. A $41.4 million federal grant is expected to drive mass timber research in Oregon during the next several years.
Oregon’s Port of Portland, which spearheaded the grant application for a coalition of partners, was one of 21 projects nationwide awarded funding as part of the Build Back Better Regional Challenge, created through the 2021 American Rescue Plan Act (ARPC).
Leaders of the statewide project set a goal of creating more than 17,000 new jobs in rural and urban communities primarily by offsetting the development costs of:
Construction of the modular home plant is expected to begin in 2024 and will eventually have the capacity to produce 2,000 homes per year.
The Department of Land Conservation and Development will modernize development codes to support the use of mass timber in housing, with an eye toward helping those who remain tenuously housed after Oregon’s devastating 2020 wildfires.
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