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Accuracy of Regional Single-Family Housing Start Forecasts

Author

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  • Thomas Fullerton, Jr.
  • Juan Luevano
  • Carol West

Abstract

This article extends earlier research on the predictability of residential construction activity in regional housing markets. This category of forecasts is used in numerous banking, government, utility, and retail applications. To analyze forecast accuracy, quarterly frequency data are assembled from previously published econometric forecasts for Florida and its six largest metropolitan economies. The sample simulation covers the period between the first quarter of 1985 and the second quarter of 1996 and includes all three business cycle phases: expansion, recession, and recovery.Forecasts for single-family starts are compared with univariate time series and random-walk alternatives. Results indicate that structural model forecasts of regional housing construction are comparatively less reliable than forecasts for nonagricultural employment. Moreover, single-family starts in Florida do not perform as well against the two benchmarks as multifamily counterparts do for the same housing markets. Modelers should possibly consider increasing coverage to include other variables as a means of improving the reliability of residential construction forecasts.

Suggested Citation

  • Thomas Fullerton, Jr. & Juan Luevano & Carol West, 2000. "Accuracy of Regional Single-Family Housing Start Forecasts," Journal of Housing Research, Taylor & Francis Journals, vol. 11(1), pages 109-120, January.
    • Handle: RePEc:taf:rjrhxx:v:11:y:2000:i:1:p:109-120
    DOI: 10.1080/10835547.2000.12091954
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    References listed on IDEAS

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    1. Thomas M. Fullerton JR., 2001. "Specification of a Borderplex Econometric Forecasting Model," International Regional Science Review, , vol. 24(2), pages 245-260, April.
    2. Ashley, Richard, 1988. "On the relative worth of recent macroeconomic forecasts," International Journal of Forecasting, Elsevier, vol. 4(3), pages 363-376.
    3. Fullerton, Jr., Thomas M. & Taylor West, Carol A., 1998. "Regional Econometric Housing Start Forecast Accuracy in Florida," The Review of Regional Studies, Southern Regional Science Association, vol. 28(3), pages 15-42, Winter.
    4. Stephen K. McNees, 1992. "How large are economic forecast errors?," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 25-42.
    5. Topel, Robert H & Rosen, Sherwin, 1988. "Housing Investment in the United States," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 718-740, August.
    6. Carol Taylor West & Thomas M. Fullerton Jr., 2004. "Assessing the Historical Accuracy of Regional Economic Forecasts," Urban/Regional 0404009, University Library of Munich, Germany.
    7. Fullerton, Thomas Jr. & Laaksonen, Mika M. & West, Carol T., 2001. "Regional multi-family housing start forecast accuracy," International Journal of Forecasting, Elsevier, vol. 17(2), pages 171-180.
    8. David G. Lenze, 2000. "Forecast Accuracy and Efficiency: An Evaluation of Ex Ante Substate Long-Term Forecasts," International Regional Science Review, , vol. 23(2), pages 201-226, April.
    9. Mizrach, Bruce, 1992. "The distribution of the Theil U-statistic in bivariate normal populations," Economics Letters, Elsevier, vol. 38(2), pages 163-167, February.
    10. Lester Hunt & Martin Snell, 1997. "Comparative Properties of Local Econometric Models in the UK," Regional Studies, Taylor & Francis Journals, vol. 31(9), pages 891-901.
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    Cited by:

    1. Croce, Roberto M. & Haurin, Donald R., 2009. "Predicting turning points in the housing market," Journal of Housing Economics, Elsevier, vol. 18(4), pages 281-293, December.
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    3. Thomas M. Fullerton Jr. & Ana Cecilia Nava, 2004. "Short-Term Water Dynamics in Chihuahua City, Mexico," Urban/Regional 0404001, University Library of Munich, Germany.

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