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.

DID YOU KNOW?

The price of hot-rolled carbon has dipped below $1,000/ton in more than a year. As of July 13, prices have declined for 12 consecutive weeks (a price decline of more than $540/ton).

Moving to Texas

Did you know that 63 businesses relocated their headquarters to Texas in 2021? Nine more have done so (through April) in 2022. With it all comes the opportunity for new projects.

This data, from a recent economic brief via Texas Comptroller's office, reflects a trend of more businesses rethinking their overall strategy in the face of a changing work environment.

The brief also cited the fact that in 2021, Texas saw an influx of projects that qualified for Site Selection magazine’s Governor’s Cup, which ranks states by their number of qualified private-sector capital investment projects (investment of at least $1 million, creation of at least 20 jobs or at least 20,000 square feet of new space).