Continued weakness in the construction market hampered results at Plum Creek Timber (NYSE: PCL) in the first quarter. While total earnings for the quarter fell more than 15% year over year to $38 million, share repurchases limited the drop in earnings per share to a 12% decline to $0.22.

Pricing for sawlogs dropped both sequentially and year over year, reflecting weak demand for lumber. However, pulpwood pricing showed improvement and worked to offset the difference. Operationally, the company is working to shift production to meet the relatively stronger pulpwood demand.

For quite a while, investors have been wondering if and when timber will join the bull markets seen in other commodities. The answer is, probably not anytime soon. Almost certainly, lumber demand will reflect the housing and construction markets and be weak for some time. Pulp and paper pricing has shown some life, but there is unlikely to be much scarcity in that market, since operators should be able to shift production from sawlogs to pulpwood to meet demand.

The strongest pricing seems to be in the market for timberland itself. Historically, timberland has shown strong performance as an alternative asset class, with returns not highly correlated with the stock market. New trends for institutional investors like pension funds and major endowments are making timberland a sought-after investment. Plum Creek noticed the upward trend in pricing and is moving to put more acreage on the market.

As much sense as this strategy makes in the short term, it doesn't seem readily sustainable over the long term. However, major institutional investors appear convinced the housing downturn is cyclical and that longer-term demographic trends will revive demand for new housing. If so, they might be increasing their commitment to the asset class and continuing to seek out acquisitions. In that case, Plum Creek's 8 million acres and the 2.6 million acres owned by fellow timberland real estate investment trust (REIT), Rayonier (NYSE: RYN) could make those companies key suppliers of a scarce and sought-after commodity.

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Fool contributor Steven Renaldi does not own shares of any company mentioned. The Motley Fool has a disclosure policy.