The lumber industry has endured a dismal year, and expects little improvement in 2008, with demand for its products perhaps softening even a bit more as fallout continues from a sharp downturn in the new-housing market.


We are basically in the midst of the steepest decline in lumber consumption ever, says Robert Butch Bernhardt Jr., spokesman for the Portland-based Western Wood Products Association, adding that the industry will likely see more of the same next year.


U.S. lumber consumption is expected to come in this year at about 54 billion board feet, plummeting from a record 64.3 billion board feet in 2005, and next year its expected to slide further, to about 52 billion board feet, Bernhardt says.


Certainly, the chief reason for that downturn has been housing, or the lack thereof, he says.


U.S. housing starts this year now are expected to end up at around 1.4 million, down from nearly 2.1 million units two years ago and well below earlier forecasts, Bernhardt says. He says theyll probably remain at about 1.4 million next year, but some forecasters suggest they could decline further before bottoming out.


There currently is about a 10-month supply of new homes on the market, and the absorption of that inventory is being slowed by record-high foreclosures and higher lending standards, Bernhardt says.


The big question is how to resolve the mortgage situation, he says. The demand, we think, is there. Unless you have pristine credit, its difficult to get virtually any kind of mortgage loan.


On the production side, Western mills likely will turn out only about 16.2 billion board feet of lumber next year, down from 18 million board feet last year, 19.3 billion board feet in 2005, and an all-time high of 24 billion board feet in 1987, he says.


Shawn Church, editor of Random Lengths, a Eugene, Ore., publication that reports lumber prices, says 2007 has been one of the worst for the industry, and theres a lot of trepidation about what lies ahead in 2008 because of the deterioration on so many fronts in housing.


Random Lengths reported composite price for framing lumber has averaged $285 per thousand board feet through the first 11 months of this year, down from full-year annual averages of $327, $387, and $404 over the last three years. The publication has noted a similar decline in the monthly composite price for structural panels.


Though mills have curtailed production sharply, particularly over the last two months, the jurys still out on whether its been enough, Church says.


Matt Van Vleet, a spokesman for Spokane-based Potlatch Corp., says, We dont see much change in 2008. Potlatchs mills arent experiencing any downtime, but many others are, he says.