Some observers of the wood products industry are expecting to see modest growth in U.S. housing starts in 2018, which would drive demand for timber and forestry products and services.

Joel White, executive officer of the Spokane Home Builders Association, says this year in terms of building permits, the single-family residential market here saw a 2 percent decline, while multifamily permits saw a decline of nearly 19 percent.

“This year wasn’t a huge expansion from last year, but there’s still a demand here for multifamily housing,” he says. “Increased material prices and the shortage of skilled workers has also delayed projects.”

Looking ahead to 2018, White says the industry is facing a leveling-off period, although there could still be moderate growth, due to low housing inventory and the high demand for single-family home construction.

“I think the multifamily investors are being cautious as to not overbuild, as when incomes rise, many renters will be looking to purchase homes,” he says.

Shawn Church, editor of the Eugene, Ore.-based Random Lengths, a publication that tracks lumber prices and forest-products industry activity, says this year saw both lumber and log prices rise to historically record highs.

“Lumber and log prices were higher mostly due to countervailing duties for Canadian lumber shipments into the U.S., which were imposed in April, and followed by additional antidumping duties in June,” he says. “Those duties on imports had a dramatic effect on prices, pushing Canadian lumber prices up substantially.”

He says additional factors impacting lumber and log markets this year were severe wildfire seasons, and labor shortages.

“Both harvesters and manufacturers are also struggling with labor shortages, which also has contributed to the supply-driven market,” he says.

Looking ahead, Church says he expects that supply factors will linger into 2018, although he’s not certain for how long.

“Things are looking pretty good for log sellers, and not as good for manufacturers who may see their margins squeezed a bit by high log prices,” he says. “Overall, I’d say most everyone is expecting continued recovery in housing and the economy, so it’s likely we’ll continue to see increased demand next year.”

Potlatch Corp., the Spokane-based forest-products company, reported third-quarter net income of $33.7 million, or 82 cents a diluted share, on revenues of $190 million, up from earnings of $27.6 million, or 68 cents a share, on revenues of $174 million in the third quarter of 2016.

In October, Potlatch Corp. announced it had entered into an agreement to merge with El Dorado, Ark.-based Deltic Timber Corp. The new company will be named PotlatchDeltic Corp. and will be based in Spokane.

The transaction is expected to be completed in the first half of next year.

Clearwater Paper Corp., the Spokane-based pulp and paper product maker, reported third-quarter net income of $900,000, or 5 cents a diluted share, comparable to $900,000, or 5 cents a share, in the year-earlier quarter.