WEYERHAEUSER CO

Our market conditions and the strength of the broader U.S. economy are, and will continue to be, influenced by the trajectory of activity in the U.S. housing and repair and remodel segments, inflation trends and interest rates. The demand for sawlogs within our Timberlands segment is directly affected by domestic production of wood-based building products. The strength of the U.S. housing market, particularly new residential construction, strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Seasonal weather patterns impact the level of construction activity in the U.S., which in turn affects demand for our logs and wood products. Our Timberlands segment, particularly the Western region, is also affected by export demand and trade policy. Japanese housing starts are a key driver of export log demand in Japan. The demand for pulpwood from our Timberlands segment is directly affected by the production of pulp, paper and oriented strand board (OSB), as well as the demand for biofuels, such as wood-burning pellets made from pulpwood. Our Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned by available supply, while Southern log markets have

WEYERHAEUSER COMPANY >2025 ANNUAL REPORT AND FORM 10-K 44 more available supply. However, additional mill capacity being added in the U.S. South has led to tightening of markets in certain geographies. Our Real Estate, Energy and Natural Resources segment is affected by a variety of factors, including the general state of the economy, local real estate market conditions, the level of construction activity in the U.S. and evolution of emerging renewable energy and carbon-related markets.

Ongoing U.S. trade policy changes have resulted in macroeconomic uncertainty and increased cautiousness by consumers. These policies, along with potential countermeasures by other countries, have the potential to affect supply and demand trends, import and export dynamics, and pricing for our products. Trade and tariff policies are generally separate from the annual establishment and collection of anti-dumping and countervailing duties (AD/CVD) placed on certain products and countries, such as for Canadian softwood lumber.

The discussion below includes a number of publicly available data points, many of which are obtained from U.S. federal government institutions. Due to the federal government shutdown that ended in November, availability of these data points is limited to October or November 2025. All other data points are updated through fourth quarter 2025.

Home sales and building activity continue to moderate in response to elevated mortgage interest rates, reduced affordability and lower consumer confidence. While overall housing inventory remains historically low across many markets, there has been some increase in unsold new and existing single-family units. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for October 2025 averaged 1.2 million units, a 7.0 percent decrease from third quarter 2025. Single-family starts averaged 874 thousand units in October 2025, a 1.0 percent decrease from third quarter 2025. Multi-family starts averaged 372 thousand units in October 2025, an 18.4 percent decrease from third quarter 2025. Single-family construction is the primary driver for our business as compared to multi-family due to the amount of wood products used. Sales of newly built single-family homes averaged a seasonally adjusted annual rate of 737 thousand units for October 2025, a 5.9 percent increase from third quarter 2025, driven by builder incentives and moderate relief in mortgage rates. Notwithstanding current macroeconomic uncertainty and potential impacts to housing demand, we expect a favorable U.S. housing construction market over the medium to long-term, supported by strong demographics in the key home buying age cohorts and a decade of under building.

Repair and remodeling expenditures decreased 0.6 percent from third quarter 2025 to the end of November 2025, according to the Census Bureau Advance Retail Spending report. While there continues to be steady demand due to growing home equity and the lock-in effect of lower mortgage rates compared to current rates, many homeowners have been more cautious in discretionary spending on large projects. Recent softness has been reflected in both the do-it-yourself (DIY) and professionally built segments, largely driven by subdued consumer confidence, elevated interest rates and concerns around the trajectory of the economy. Slower sales of existing homes have also contributed to muted activity as there is often an increase in upgrades and repairs before and after the sale of a home. Over the longer term, we expect this sector to return to historical growth trends driven by recent deferrals in repair and remodel spending, higher levels of home equity and an aging U.S. housing stock, with a median age of 46 years.

In U.S. wood product markets, soft end use demand and steady supply have led to continued price weakness in commodity products. In fourth quarter 2025, the Random Lengths Framing Lumber Composite price averaged $378/MBF and the OSB Composite averaged $234/MSF, both near multi-decade lows on an inflation-adjusted basis. Over the course of fourth quarter 2025, composite prices for lumber increased from $367/MBF to $385/MBF and composite prices for OSB decreased from $237/MSF to $230/MSF. The Framing Lumber Composite began the fourth quarter on a slight upward trajectory supported by improving Western SPF pricing and broader concerns around the Section 232 tariff, which took effect in October. As the quarter progressed, ample product supply and seasonally softer demand led to lower composite pricing through early December. By quarter end, product supply decreased and demand improved as buyers replenished lean inventories. This drove price gains across North American lumber markets, with a notable increase in Southern Yellow Pine. For OSB, soft product pricing in fourth quarter 2025 was largely driven by lower demand in response to the seasonal reduction in new home construction activity. In September 2025, Weyerhaeuser elected to moderate production across its lumber mill set in response to the softer demand environment, and maintained a lower operating posture through year end 2025. When combined with the volume impact associated with the sale of the company’s sawmill in Princeton, British Columbia – which was sold in late third quarter 2025 – Weyerhaeuser’s lumber production volumes decreased by 14 percent in fourth quarter 2025 compared to the prior quarter. The company expects to return to a more normalized operating posture in first quarter 2026.

In Western log markets, Douglas-fir sawlog prices decreased 5.6 percent in fourth quarter 2025 compared with third quarter 2025, as reported by Fastmarkets RISI Log Lines based on Weyerhaeuser’s sales mix. Log prices in the domestic market faced downward pressure as supply remained ample, and mills continued to carry elevated log inventories and navigate a challenging lumber market. In the South, delivered sawlog prices decreased 2.3 percent in fourth quarter 2025 compared to third quarter 2025 and declined 2.3 percent from fourth quarter 2024, as reported by TimberMart-South. Delivered pine pulpwood prices decreased 2.1 percent in fourth quarter 2025 compared to third quarter 2025 and declined 4.7 percent from fourth quarter 2024 as reported by TimberMart-South. In general, Southern log supply remains ample and wood product and fiber mills continue to align production with end-market demand. Pulpwood prices have been more challenged in several localized regions following recent mill closures.

Currency exchange rates, available supply from other countries and trade policy affect our export businesses. In Japan, total housing starts decreased 7.4 percent year-to-date through December compared to the same period in 2024, while the key Post and Beam segment saw a 4.0 percent decrease, in part due to more stringent building permit requirements which went into effect on April 1, 2025. The slowing demand has been partially offset by a decrease in lumber imports to Japan from Europe and reduced inventories of European lumber in the Japanese market. In China, during fourth quarter 2025 regulators lifted the March 4, 2025 suspension of log imports from the U.S. As a result, Weyerhaeuser is in the early stages of re-establishing its log export program to strategic customers in China.

Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy and their influence on our capital management activities. Actions by the U.S. Federal Reserve, the overall condition of the economy and fluctuations in financial markets are all factors that influence long-term interest rates. 30-year mortgage rates, which are generally correlated with long-term interest rates, decreased from 6.3 percent in third quarter 2025 to 6.2 percent in fourth quarter 2025, according to economic data from Freddie Mac. Many builders have been able to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes. Higher rates have also locked in many existing homeowners from selling, thereby reducing inventories of existing homes for sale which has led to incremental demand for available new homes.

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Increased inflation affects the cost of our operations across each of our business segments, including costs for raw materials, transportation, energy and labor. The Consumer Price Index increased at an annual rate of 2.7 percent as of December 2025 compared to 3.0 percent as of September 2025. This rate is markedly down from prior periods of elevated inflation. While we can offset some of our costs that are affected by inflation through our sales activities, operational excellence initiatives and procurement practices, not all costs associated with inflation can be fully mitigated or passed on to the customer.

The condition of the labor market affects all of our businesses as it relates to our ability to attract and retain employees and contractors. The unemployment rate remained level at 4.4 percent in third quarter 2025 and fourth quarter 2025.

Governments and businesses across the globe have publicly expressed that climate change is a compelling issue requiring considerable responsive action; many have made significant commitments toward decarbonizing activities and operations and reducing greenhouse gas emissions. Achieving these commitments will require significant efforts, including modifying operations, investing in low-carbon technologies or purchasing credits to reduce environmental impacts. Although political and broader sentiment for climate change mitigation activities and related investments can fluctuate, we expect that over the long-term, climate change will continue to be a significant social concern and priority. With that in mind, we believe we are uniquely positioned to help others achieve climate change mitigation goals through our Climate Solutions business.

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