This 3 page paper uses data provided by the student to carry out a regression analysis to project the number of house builds that will be started at specific interest rates. The paper gives the equation and conducts the analysis and then considers why this type of analysis may be beneficial to a construction company. The bibliography cites 2 sources.
Name of Research Paper File: TS14_TEreghouse.rtf
Unformatted Sample Text from the Research Paper:
knowing the way that interest rates have impacted on house starts in the past it is possible to forecast the potential future result where a known change occurs, in this
case where specific interest rates change. The method to be used is that of linear regression analysis, this looks at the pattern of the data and seeks to draw
a line though it where there is the least squares between the line and the data (Curwin and Slater, 2000). If we place the data in a scatter graph we
get the following. The equation to be used for this, when we have the values for the x and the y variables is y = a + bx
Where b = n S xy - S x S y / n S x2 - (S x)2 With this we can then calculate the potential house start ups for
different interest rate levels. These would be Interest rates 8.5% 4.5% 3.7% 2.3% House starts 34,355 94,645 106,704 127,805 This is useful information for those who work in the
construction industry. IN any industry f there is an idea of what the future demand is going to be then the supplier can prepare to cope with the new circumstances
(Nellis and Parker, 2000). This is why many firms spend a great deal of money trying to predict the changes in the macro environments that will impact on the demand
for the products. If we look at housing interest rates may be seen as a major influences as most houses are bought with loans. Where interest rates are higher
the cost of the repayments on the loan will be higher. This means that the level of debt which can be supported will be less as the disposable income will