The lumber industry has been hammered this year, and a downturn in demand that has hurt the industry likely will persist for another year, until the U.S. economy and the nation's housing market improve, industry representatives say.

Shawn Church, editor of Random Lengths, a Eugene, Ore., publication that reports lumber prices, calls 2008 a "historically terrible year" for the industry.

Random Lengths' reported composite price for framing lumber has averaged $255 per thousand board feet through the first 11 months of this year, down from full-year annual averages of $284, $327, $387, and $404 in the previous four years. November was the worst month this year at $224. Random Lengths' composite price for 1,000 square feet of structural panel has averaged $295 through November, compared with yearly averages of $298, $315, and $408 in the previous three years.

"The industry has curtailed production dramatically, to try and bring supply back in line with demand," Church says. The year has been marked by employment cutbacks, along with temporary and permanent mill closures.

"Some people in the industry see some beginning of a recovery in 2009," Church says.

U.S. housing starts probably won't top 900,000 this year, he says. "Housing is going to finish at its lowest level since record keeping began," he says.

By comparison, there were about 1.4 million housing starts in 2007, 1.8 million in 2006, and just over 2 million in 2005, he says. He says forecasters' estimates for 2009 housing starts are likely to range from 750,000 to 850,000 units.

The Portland-based Western Wood Products Association says its forecast for housing starts in 2009 is 803,000, the lowest total since World War II.

The association says lumber consumption is expected to fall to 35 billion board feet in 2009, a 26-year low. That compares with a record 64.3 billion board feet in 2005. New housing typically accounts for 40 percent of annual lumber demand, so the drastic decline in housing starts since 2005 has been a "body blow to lumber mills," the association says.

"Markets are to improve slowly in 2010, with housing starts rising to 936,000, and lumber consumption increasing to 39.5 billion board feet," according to the association's recently published forecast.

By 2011, the lumber industry's recovery should be in full swing, with both housing and lumber demand up by double-digits, it says.

Last month, Spokane-based Potlatch Corp. announced temporary closures of some of its mills, including its plywood plant at St. Maries, Idaho, and a sawmill in Lewiston, due to poor market conditions. Potlatch said that its Post Falls particle board plant also was closed temporarily.

Matt Van Vleet, a Potlatch spokesman, says the lumber and panel markets are at 25-year lows because they are so closely aligned with the new home construction industry.

"We were hoping for a recovery in the lumber market in 2009, but now it looks like that probably won't happen, and we hope to see a significant improvement in 2010," Van Vleet says. "Consumer tissue business is very good, and throughout our company we sell every case we make of tissue products. Pulp and paperboard is still strong, but we've seen some softening, which is typical around the holidays."