Before the sub-prime loan crisis and the end of the housing bubble in 2008 the value of
Question:
Before the sub-prime loan crisis and the end of the
“housing bubble” in 2008 the value of houses was escalating rapidly, as much as 40% a year in some areas. In an effort to track housing prices the National Association of Realtors developed the Pending Home Sales Index (PHSI), a new leading indicator for the housing market. An index of 100 is equal to the average level of contract activity during 2001, the first year to be analyzed. The index is based on a large national sample representing about 20% of home sales.
The file entitled Pending contains the PHSI from January 2004 to August 2005.
a. Determine the mean and median for the PHSI between January 2004 and August 2005. Specify the shape of the PHSI’s distribution.
b. The PHSI was at 111.0 in January 2004 and it was at 129.5 in August of 2005. Determine the average monthly increase in the PHSI for this period.
c. Using your answer to part
b, suggest a weighting scheme to calculate the weighted mean for the months between January 2004 and August 2005.
Use the scheme to produce the weighted average of the PHSI in this time period.
d. Does the weighted average seem more appropriate here? Explain.
Step by Step Answer:
Business Statistics A Decision Making Approach
ISBN: 9780136121015
8th Edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry, Kent D. Smith