Housing starts are expected to rise 5.0% in February vs. the previous month in tomorrow’s update, according to The Capital Spectator’s average econometric forecast. That compares with an 8.5% decrease reported for January (seasonally adjusted annual rate). The Capital Spectator’s projected gain for February is above the expected increases in several consensus forecasts drawn from surveys of economists.
Here’s a closer look at the numbers, followed by brief definitions of the methodologies behind The Capital Spectator’s projections:
VAR-3: A vector autoregression model that analyzes three economic series to project housing starts: new home sales, newly issued permits for residential construction, and the monthly supply of homes for sale. VAR analyzes the interdependent relationships of these series with housing starts through history. The forecasts are run in R using the “vars” package.
ARIMA: An autoregressive integrated moving average model that analyzes the historical record of housing starts in R via the “forecast” package.
ES: An exponential smoothing model that analyzes the historical record of housing starts in R via the “forecast” package.