(Bloomberg) -- A pall in North America’s housing market is slashing demand for lumber and threatening to shut down sawmills in one of the continent’s biggest timber producing regions.

Lumber futures fell 4% to $433 per 1,000 board feet as of 2:46 p.m. in Chicago, extending a slump to about 62% this year. The price is so cheap that it may result in sawmill closures in the heavily forested western Canadian province of British Columbia as producers try to reduce supplies, according to RBC Capital Markets analyst Paul Quinn.

“We are below the bottom, so B.C. producers are losing money,” Quinn said in an email. “I suspect we will get a number of sawmill closures over the next year.”

The move is a stark reversal from the all-time highs set in 2021 during a pandemic-fueled homebuilding boom and comes as this year’s surge in borrowing costs has made homes too pricey for buyers. The Federal Reserve’s rate hike this week added to the gloom and Chair Jerome Powell said the housing market was ‘very overheated’ during the pandemic.

Canadian producers West Fraser Timber Co. and Canfor Corp. already announced reductions in output at B.C. sawmills this year. US homebuilders get more than a quarter of their lumber from Canada.

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