Forecasting for House Sales in Us

In: Business and Management

Submitted By rvn1280
Words 2230
Pages 9
Forecasting Project
House Sales in USA
Presented by:
Michelle Deets
Ravin Seju
Ankan Sinha

March 7, 2016
Professor Dawit Zerom
ISDS 526

Executive Summary
The data in the report “Monthly total houses sold in the United States for the period January
1978 through July 2007” is time series data representing sales in thousands of units. The data has not been seasonally adjusted. Our project was to produce forecasts of housing sales by creating a model using Forecast Pro’s Expert Selection Method. The model was generated by withholding 2 years of data and creating a forecast based upon the data from January 1978 to July 2005. We provided fit measures based upon MAPE and RMSE and evaluated the model’s accuracy MAPE,
RMSE, and GMRAE from Forecast Pro’s out-of-sample statistic evaluation table. The MAPE numbers show that the forecast expands from a 7.95% error at the beginning of the holdout period and quickly grows to 32% error within 24 months. The acceptability of this error depends upon which managers are using it. The housing industry touches many fields, from moving to painting to construction to land purchases. This large of an error might could be unacceptable given the amount of risk and resources involved in construction of new single family homes; a manager might prefer to only use the first 6 months of forecasted data to stay within a 10% error range. Looking at the results of the forecast’s graph, the actual data (Exhibit A, represented by the green line) shows that actual housing sales dropped from July 2005 to July 2007. However, our forecasting model predicted that housing sales would vacillate but reach steady seasonal peaks
(represented by the red line). Using this forecast could devastate a company if it invested with the thought that the houses would sell at predictable intervals. This holdout analysis shows that we cannot…...

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