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| Forecasting Sales and Price for Existing
Single-Family Homes: A VAR Model with Error Correction Author: Zhong-guo Zhou Start Page: 155 Abstract: In this paper we
forecast demand for existing single-family housing in the United States. We first find
that sales volume (sales) and median sales price (price) have unit roots. We then find
that sales and price are cointegrated. We develop a vector autoregressive (VAR) model with
error correction to further examine the causality between sales and price. We find that
there exists a bidirectional causality relationship between sales and price. Price affects
sales significantly and sales affects price weakly. With the VAR model we then forecast
sales and price for existing single-family housing during the period 1991 to 1994 by using
a recursive method. We find that our predictions for sales and price fit the actual data
well. |
