This paper examines the energy and carbon balance of two residential house alternatives; a typical wood frame home using more conventional materials (brick cladding, vinyl windows, asphalt shingles, and fibreglass insulation) and a similar wood frame house that also maximizes wood use throughout (cedar shingles and siding, wood windows, and cellulose insulation) in place of the more typical materials used – a wood-intensive house. Carbon emission and fossil fuel consumption balances were established for the two homes based on the cumulative total of three subsystems: (1) forest harvesting and regeneration; (2) cradle-to-gate product manufacturing, construction, and replacement effects over a 100-year service life; and (3) end-of-life effects – landfilling with methane capture and combustion or recovery of biomass for energy production. The net carbon balance of the wood-intensive house showed a complete offset of the manufacturing emissions by the credit given to the system for forest re-growth. Including landfill methane emissions, the wood-intensive life cycle yielded 20 tons of CO 2e emissions compared to 72 tons for the typical house. The wood-intensive home's life cycle also consumed only 45% of the fossil fuels used in the typical house. Diverting wood materials from the landfill at the end of life improved the life cycle balances of both the typical and wood-intensive houses. The carbon balance of the wood-intensive house was 5.2 tons of CO 2e permanently removed from the atmosphere (a net carbon sink) as compared to 63.4 of total CO 2e emissions for the typical house. Substitution of wood fuel for natural gas and coal in electricity production led to a net energy balance of the wood-intensive house that was nearly neutral, 87.1 GJ energy use, 88% lower than the scenario in which the materials were landfilled. Allocating biomass generation and carbon sequestration in the forest on an economic basis as opposed to a mass basis significantly improves the life cycle balances of both houses. Employing an economic allocation method to the forest leads to 3–5 times greater carbon sequestration and fossil fuel substitution attributable to the house, which is doubled in forestry regimes that remove stumps and slash as fuel. Thus, wood use has the potential to create a significantly negative carbon footprint for a house up to the point of occupancy and even offset a portion of heating and cooling energy use and carbon emissions; the wood-intensive house is energy and carbon neutral for 34–68 years in Ottawa and has the potential to be a net carbon sink and energy producer in a more temperate climate like San Francisco.