Canadian lumber stocks have been in a major tailspin since mid-February, but it may be a while longer until they bottom, says Martin Roberge, portfolio strategist at Canaccord Genuity.

“Do not chase down broken lumber stocks,” he said in a note to clients Thursday. “While we have a positive view on the U.S. housing market, U.S. imports of Canadian wood products continue slowing down due to a glut in U.S. wholesale lumber inventories.”

The S & P/TSX forest products index has fallen 23% since peaking on Feb. 12 and it now trades below its 40-week average on both absolute and relative terms to the broader TSX composite.

Roberge said the glut in lumber inventories south of the border helps explain why lumber prices are at 52-week lows near $270 per board foot, but it isn’t the only headwind facing the industry.

“Moreover, Chinese demand for Canadian wood products is now contracting owing to a severe housing market downturn,” he said. “Also, in Canada, housing starts have begun their descent, falling to 156K units in February. This is the smallest number of starts since 2009.”

If that isn’t enough warning, lumber stocks are entering a negative seasonality window from May to October and the group remains pricey on a relative price-to-sales ratio, Roberge added.