Federal Reserve Economic Data (FRED) is a comprehensive database maintained by the Federal Reserve Bank of St. Louis. It provides access to a wide range of economic data, including economic indicators, financial and banking data, monetary data, and regional data for the United States. FRED aggregates data from various government agencies, international organizations, and other sources, making it a valuable resource for researchers, economists, policymakers, and the general public.
The dataset retrieved from FRED website comprises of six time series:
i) Median Sales Price of Houses Sold for the United States
ii) Monthly supply of New Houses in the United States
iii) New Privately owned Housing units started
iv) Home ownership rate in the United States
v) 30 Year Fixed Rate Mortgage Average in the United States
vi) Consumer Price Index (CPI) for All Urban Consumers: All Items Less Shelter in U.S. City Average
The objective is to predict Median Price (i) based on four other factors (ii), (iii), (iv) & (v).
The CPI data (vi) will not be used as a predictor but will be used to adjust Median Price based on inflation.
These four variables are fundamental drivers influencing the supply and demand dynamics of the housing market. For instance, the monthly supply of new houses and new housing units started (ii) offer insights into the supply side of the market, while the home ownership rate (iv) reflects the demand for housing. Moreover, the 30 year fixed rate mortgage average (v) directly impacts affordability and purchasing power, crucial factors influencing housing demand.