Along with just about everything else these days, prices at the pump have been surging this year.  According to AAA, the national average price of a gallon of gas currently stands at $2.88 per gallon.  To find the last time prices were this high, you have to go back to May 2019.  This year alone, gas prices have already increased 27.7%.  The table below compares the change in gas prices so far this year to the same time period in every other year since 2005, while the chart compares the trend in prices this year to a composite pattern of all other years.  At the current price level, gas prices are the highest they have been at this point in the year since 2014, and there have only been five other years where prices were higher.

What really stands out, though, is how fast prices have increased.  Prior to 2021, there wasn’t a single year since 2005 that the national average price increased by more than 20% YTD through 3/17, but this year, they’re already up 27.7%!  Based on the typical seasonal pattern, don’t expect much in the way of relief anytime soon.  Typically, prices at the pump rise right up through Memorial Day and then level off for the summer before easing in the last four months of the year.

The recent rise in gasoline prices has also been incredibly consistent.  It has now been 52 straight days that the national average price has gone without a one-day decline and represents just the fourth streak of 50 or more days since 2005.  The longest streak ended at 76 days in early 2019 (the last time prices approached $3 per gallon) while the only two other streaks were in 2007 and 2009.

With the early stages of the COVID outbreak now a year in the rearview mirror, we’re starting to see some crazy y/y moves in gas prices and these moves are only going to get more extreme as we approach the one-year anniversary of crude oil prices going negative.  The average price of a gallon of gas is up 28.3% versus a year ago which is already the highest y/y pace in four years.  In the weeks ahead, though, this y/y rate is almost guaranteed to increase.  As mentioned above, gas prices typically rise between now and the end of April, and in the 16 years since 2005, there have only been three years where prices declined between now and 4/30. Not only that, but during the period from 3/17 through 4/30 last year, gas prices decline more than 20%.  Therefore, even if prices stay flat between now and 4/30, the y/y increase will surge to 62.8%, which would be just shy of a record y/y pace.  The FOMC may be pulling out all the stops to get inflation higher, but unless you own a gas station, these trends in gas prices are painful.  Start a two-week free trial to Bespoke Institutional for full access to all of our research and market commentary.

The National Association of Home Builder’s measure of homebuilder sentiment fell again in March. Although the index’s 2 point decline down to 82 leaves it 8 points off the November record high, the current level of sentiment is still a few points above the pre-pandemic record high.

A decline in present sales drove that decline as the index fell 3 points from 90 to 87.  As with the headline number, although that is a decline from the peak of 96 in November, the current reading is still above anything recorded prior to the pandemic.  Additionally, considering the indices for Future Sales and Traffic have held up better, that decline in Present Sales does not necessarily point to a broader downturn in demand. Even though Present Sales were lower, the index for Future Sales rose by 3 points recovering the ground lost in February while Buyer Traffic also avoided a decline as that index went unchanged from February. Again rather than a broader deterioration of conditions, the decline in Present Sales could be a result of issues like rising prices of things like lumber and higher mortgage rates which in turn means overall higher costs of a new home.

The South was the only region to avoid a decline in March.  That index held steady at 82 for the third month in a row. The Northeast also fared a bit better than the other regions as the index only fell one point from last month’s level that was tied with October for a record high. The Midwest and the West fell more sharply with each index dropping 3 points.  Regardless of those declines, both indices continue to come in at historically strong levels.

With the weaker headline release providing a bit of a headwind in terms of catalysts, the iShares Home Construction ETF (ITB) is fighting to break out and hold above its early February highs today.  Last week it unsuccessfully tried to take out resistance, but still remains right below its prior highs.

Looking across S&P 1500 homebuilder stocks, there are two in our Trend Analyzer tool that currently earn “good” timing scores: TopBuild (BLD) and NVR (NVR). Whereas the broader group is testing 52-week highs, BLD and NVR are some of the few that are not currently overbought having recently pulled back a bit.  After taking a brief dip below its 50-DMA late last month, BLD has been fluctuating around its moving average over the past few days. NVR on the other hand was unsuccessful in breaking out last week which was followed by a successful bounce off of its 50-DMA yesterday.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.