LEONARD LUMBER REPORT: Housing data continues to lean neutral-to-slightly better

Weekly Recap:

Macro / Demand Housing data continues to lean neutral-to-slightly better, with 2026 new home numbers running modestly ahead of 2025. Currently we do not a recessionary setup—but a margin problem. Inflation-driven costs keep squeezing profitability across the chain, leaving builders and dealers operating day-to-day with little appetite for risk. Demand exists, but conviction doesn’t. The market is reverting to its mean where there are no more easy buys, replacement cost are higher, and resistance to paying up is building. Ironically, that reluctance could be what sets up higher prices later—higher prices, not demand destruction, may become the real pain point. Let’s note that the wood trading today is very cheap on a relative basis so the higher replacement is what it seems.

Industry Tone Everyone is still making money—but no one feels good about it. Big boxes are questioning SKU economics; homeowners are tapped out after years of upgrades, and low-rate mortgages are freezing mobility. It’s a functioning market, just not a comfortable one.

Futures / Structure The July contract continues to absorb the pressure from the roll, which is breaking away from the norm so far.  This appears less about excess inventory and more about real-time procurement replacing forward planning. Elevated replacement costs are forcing buyers to stay closer to the front month, sidelining second-month participation. Prior buying interest under May $570 suggests futures are being used efficiently when value shows up—signaling underlying need, not speculation. Any second month contract sub-$580 still screens as value, but patience is scarce. Like May, July increasingly looks like a delayed bear trap rather than true weakness. We continue to see the industry shorts liquidate telling us the key for basis, the sharp break possibility, is limited.

Bottom Line This remains a low-conviction, high-cost market. Structure—not demand collapse—is driving price behavior. Until margins stabilize or a catalyst hits, expect choppy trade, shallow dips, and value recognition as a timing tool, not a dollar.

Technical:

Since mid-2025, the market has produced four cycle-high rallies, each followed by a lower trend. Notably, the slope of each selloff has been flattening. The current weekly pattern—marked by a blowoff move lower followed by a marginally improved trade—could be signaling the start of a fifth cycle higher. This view is based on the May contract. With May expiring this week, timing makes the call difficult. The weekly trendline comes in near 554. If May can hold above that area, it would argue the next cycle is underway.

The technical read has only offered small portions of data and not much directional help recently. It looks as if there isn’t much offered in either cash or futures today.

Daily Bulletin: