Hardwood lumber sales in the first quarter of the year were a bit below industry expectations, as lumber production exceeded demand and caused widespread buildups in inventories, especially in the oaks.

There are signs that lumber price declines have begun to stabilize, but we continue to anticipate that lumber markets will remain slow with prices under pressure until fall.

Domestic markets have strengthened a bit in the past month, if government statistics are to be believed, with new home sales rising 7.8% in February and unemployment holding at 5.5% — though it takes a special kind of optimism to see much “improvement” in recent housing and employment data.

Sales reports from distribution yards indicate most of their increased business is to contractors building higher-priced homes. In many U.S. housing markets, in fact, the only strength at all is at the top levels, and in vacation homes.

Hardwood exports improved in February but continue to underwhelm expectations. Year-to-date shipments were off 6.3% from the 2014 pace—the equivalent of 650 fewer containers shipped each month.

Reports indicate China’s economy continues to slow; its March imports were 12% lower than year-ago levels, and exports were off 15%. European lumber demand is slowly improving, but exchange rates remain unfavorable for U.S. shippers.