To evaluate the weakest location and detect damage at the earliest possible stage to avoid the future catastrophic failure, in this study, the modal testing was performed on wood beams to generate the first two mode shapes. A novel statistical algorithm was proposed to extract the damage indicator by computing the local modal flexibility before and after damage in timbers. The different damage severities, damage locations and damage counts were simulated by removing mass from intact beams to verify the algorithm. The results show that the proposed statistical algorithm is effective and suitable to the designed damage scenarios. It is reliable to detect and locate the local damages under different severities, locations and counts. The peak values of the damage indicators computed from the first two mode shapes are sensitive to different damage severities and locations and they are also reliable to detect the multiple damages.