Lower Interest Rates May Fuel Demand for Housing and Timber

Timberland REITs specialize in owning timberlands, and through their taxable subsidiaries, harvesting and selling timber for lumber products. Timberland REITs own nearly 15 million acres of land in 18 different states in the U.S., primarily in the southeast and the pacific northwest. Timber REITs contribute to potential climate solutions for the decarbonization of the real estate sector by providing wood-based construction materials that naturally absorb and store carbon as they grow, as a substitute for more carbon intensive materials like concrete and steel.

Timberland returns had a strong third quarter in 2024. The lumber business is strongly tied to the housing market. August was a strong month for housing starts with a seasonally adjusted increase of 9.6% from July 2024 and an increase of 3.9% from August 2023. Interest rates on 30-year fixed mortgages have started to decline after the post-pandemic peak of 7.8% in October 2023 and are down to just over 6% in mid-September 2024. With the expected Federal Reserve cuts to the interest rate continuing in 2024 and 2025, the housing market is expected to improve.

• 5%: Forests cover 34% of land in the U.S. and while globally, forest land has been decreasing, forest area in the U.S. increased from 1990 to 2020 by nearly 5% according to the Forestry and Forest Products Research Institute.
• 13,000 board feet: On average, a single-family home contains more than 13,000 board feet of lumber.
• 12%: Forests in the U.S. sequester roughly 12% of total carbon emissions, according to the U.S. Forest Service
   

Below is a list of Nareit member companies from the timberlands sector.