FORECASTING US HOME SALES USING BVAR MODELS AND SURVEY DATA ON HOUSEHOLDS BUYING ATTITUDES FOR HOMES

This study uses Bayesian vector autoregressive models to examine the u sefulness of survey data on households' buying attitudes for homes in predicting sales of homes. We find a negligible deterioration in the a ccuracy of forecasts of home sales when buying attitudes are dropped f rom a model that includes the price of homes, the mortgage rate, real personal disposable income, and the unemployment rate. This suggests t hat buying attitudes do not add much to the information contained in t hese variables. We also find that forecasts from the model that includ es both buying attitudes and the aforementioned variables are similar to those generated from a model that excludes the survey data but cont ains the other variables. Additionally, the variance decompositions su ggest that the gain from including the survey data in the model that a lready contains other economic variables is small.