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# Multiple Regression of Lumber Prices and Number of Housing

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Using this sample problem, compute the multiple regression formula using the interest rates, lumber prices, and number of housing starts provided below. Once you have computed the multiple regression formula answer the following questions.

Using this sample problem, compute the multiple regression formula using the interest rates, lumber prices, and number of housing starts provided below. Once you have computed your multiple regression formula answer the following questions.
What is the regression formula that you computed? It should be of the form
Y = a1*X1 + a2*X2 + b
where
Y = number of housing starts
X1 = interest rates
a1 = regression coefficient of interest rates
X2 = lumber prices
a2 = regression coefficient of lumber prices
b = constant.
What would the approximate number of housing starts be at the following interest rates and lumber prices:
9.0% at \$1.00 per board foot
8.5% at \$1.50 per board foot
5.5% at \$1.25 per board foot
4.5% at \$0.90 per board foot
3.7% at \$1.00 per board foot
2.3% at \$0.75 per board foot.
Use Excel to assist you with the calculations. Input the above data in an Excel spreadsheet and input your multiple regression formula using the data cells as the variables. Excel can then automatically compute the results.
If you were the owner of a business in the housing construction sector how would this information affect your decisions?
Housing Starts in Relation to Interest Rates and Lumber Prices
Interest Rate Price Per Board Foot Housing Starts
11% \$1.25 8,500
11% \$1.00 9,000
11% \$0.90 9,200
11% \$0.75 9,500
10% \$1.25 9,700
10% \$1.00 10,000
10% \$0.90 10,300
9% \$1.25 22,000
9% \$1.00 24,000
8% \$1.25 39,000
8% \$0.90 45,000
8% \$0.75 52,000
Click HERE to compute the multiple regression formula. (Use the multiple regression equation to compute your formula. NOTE: Enter percentages as .08, .09, .10, etc.)