Individual Coursework
The data file house_starts contains data on 30-year fixed mortgage rates (FIXED_RATE), new home construction in thousands (STARTS), and houses sold in thousands (SOLD). There are 184 monthly observations from January 1990 to April 2005.
(a) Plot each of the series (FIXED_RATE, STARTS and SOLD) against time. Comment on the observations.
(b) Plot new home construction (STARTS) against the 30-year fixed mortgage rate (FIXED_RATD). Comment on the observations.
(c) Estimate the simple regression of STARTS on FIXED_RATE. Show your regression output. Discuss the interpretation of the results as well as any comments you may have about how well the line fits the data. Plot the fitted regression line along with the data scatter from (b).
(d) Plot houses sold (SOLD) against FIXED_RATE. Comment on the observations.
(e) Estimate the simple regression of SOLD on FIXED_RATE. Discuss the interpretation of the results as well as any comments you may have about how well the line fits the data. Plot the fitted regression line along with the data scatter from (d).
(f) If the 30-year fixed rate mortgage rate is 6%, predict the number of monthly new home constructions.
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