Revisiting U.S. softwood lumber demand projections: The central role of residential construction in forest sector outlooks

U.S. softwood lumber demand is intrinsically linked to residential construction. However, most previous studies have not adequately accounted for this key demand driver when projecting lumber demand. This study links projected housing activity under the Shared Socioeconomic Pathways (SSPs) to softwood lumber demand by explicitly incorporating housing starts into the Forest Resource Outlook Model (FOROM). To support this integration, we first estimate updated demand elasticities using quarterly U.S. data from 2000 to 2024 within an instrumental variables framework. Results show that housing starts are the dominant driver of demand (elasticity 0.59), while the income elasticity declines to 0.14—well below previous estimates—and price elasticity remains inelastic at −0.21. These empirically grounded elasticities are then embedded in FOROM, allowing SSP-consistent housing projections to directly shape long-term market outcomes. The revised specification improves alignment with recent historical data and produces more credible projections. Across SSP scenarios, U.S. softwood lumber demand declines by 2070, though outcomes differ significantly: SSP5 yields the highest consumption, while SSP3 produces the lowest. Regional impacts are uneven, with the U.S. South experiencing the largest contractions and the Pacific Coast showing greater resilience. By explicitly linking housing projections to forest sector modeling, this study demonstrates that incorporating construction activity is critical for translating socioeconomic scenarios into accurate timber market outcomes, with important implications for policy, investment, and resource planning.