The Outcome of Cancellation

Across the country, sales for new homes are falling and buyers are canceling contracts for home projects at a higher rate than last year.

According to a June survey of home builder sentiment by John Burns Real Estate Consulting, sales of new homes fell 31% in June compared to last year. Cancelation rates jumped to 14.5% nationally during the month, up from 6.5% a year ago.

Texas saw the highest rate of cancelations (27%), according to the monthly survey of 320 participants in 84 metro areas.

Both trends could have a ripple effect for demand of various products, ranging from home appliances to recreational equipment.

What’s Up with Aluminum?

From surcharges to shutdowns, aluminum prices could be influenced by several factors in the coming months. For example:

• Magnesium surcharges are 4-5 times higher than average. The cost of magnesium typically hovers around - $2.00-$2.50/lb.

• Capacity at domestic mills remains constrained for common aluminum alloys (5052/3003). Similar availability and lead times are expected in the second half of the year.

• The energy crunch could be hitting North American aluminum smelters. Talk of smelter shutdowns in the U.S. continues to gain momentum as the cost to produce aluminum rises because of higher energy prices.