The above contains data on median home prices in the West Census region quarterly from 2010 to 2018. Easter Realtor, Inc. is interested in houses in this region. They want to use this data to forecast home price in the fourth quarter of 2018. For cross-validation, use the training set from the first quarter of 2010 to the fourth quarter in 2016, and use a validation set from the first quarter of 2017 to the third quarter of 2018. Use this data to do the following: a. Use the training set to build a linear and quadratic trend models with seasonal dummy variables to capture the seasonality. b. Calculate the RMSE (or the MSE) for the validation set of each model and choose the best model. c. Re-estimate the best model using the entire data set and use it to forecast home price in the fourth quarter of 2018.
| Year | Quarter | Price |
| 2010 | 1 | 263600 |
| 2010 | 2 | 264100 |
| 2010 | 3 | 259500 |
| 2010 | 4 | 248900 |
| 2011 | 1 | 251400 |
| 2011 | 2 | 259200 |
| 2011 | 3 | 251400 |
| 2011 | 4 | 252000 |
| 2012 | 1 | 272300 |
| 2012 | 2 | 258600 |
| 2012 | 3 | 265500 |
| 2012 | 4 | 291200 |
| 2013 | 1 | 290500 |
| 2013 | 2 | 302400 |
| 2013 | 3 | 322900 |
| 2013 | 4 | 331000 |
| 2014 | 1 | 324700 |
| 2014 | 2 | 344400 |
| 2014 | 3 | 327500 |
| 2014 | 4 | 355400 |
| 2015 | 1 | 347200 |
| 2015 | 2 | 341000 |
| 2015 | 3 | 330800 |
| 2015 | 4 | 370300 |
| 2016 | 1 | 350800 |
| 2016 | 2 | 380000 |
| 2016 | 3 | 368600 |
| 2016 | 4 | 371100 |
| 2017 | 1 | 372500 |
| 2017 | 2 | 386300 |
| 2017 | 3 | 385500 |
| 2017 | 4 | 409700 |
| 2018 | 1 | 408000 |
| 2018 | 2 | 423400 |
| 2018 | 3 | 404300 |
Predictive Analytics: Time-Series Forecasting:
The above contains data on median home prices in the West Census region quarterly from 2010 to
2018. Easter Realtor, Inc. is interested in houses in this region. They want to use this data to
forecast home price in the fourth quarter of 2018. For cross-validation, use the training set from
the first quarter of 2010 to the fourth quarter in 2016, and use a validation set from the first
quarter of 2017 to the third quarter of 2018. Use this data to do the following:
a. Use the training set to build a linear and quadratic trend models with seasonal dummy
variables to capture the seasonality.
b. Calculate the RMSE (or the MSE) for the validation set of each model and choose the best
model.
c. Re-estimate the best model using the entire data set and use it to forecast home price in
the fourth quarter of 2018.
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