Now-Casting Building Permits with Google Trends

27 Pages Posted: 3 Feb 2017

See all articles by David Coble

David Coble

University of Chicago - Department of Economics

Pablo M. Pincheira

Adolfo Ibanez University - School of Business

Date Written: February 1, 2017

Abstract

We propose a useful way to predict building permits in the US, exploiting rich real-time data from web search queries. The time series on building permits is usually considered as a leading indicator of economic activity in the construction sector. Nevertheless, new data on building permits are released with a lag close to two months. Therefore, an accurate now-cast of this leading indicator is desirable. We show that models including Google search queries now-cast and forecast better than our good, not naïve, univariate benchmarks both in-sample and out-of-sample. We also show that our results are robust to different specifications, the use of rolling or recursive windows and, in some cases, to the forecasting horizon. Since Google queries information is free, our approach is a simple and inexpensive way to predict building permits in the United States.

Keywords: Online Search, Prediction, Forecasting, Time Series, Building Permits, Real Estate, Google Trends

JEL Classification: C220, C530, E170, E270, E370, F370, L740, O180, R310

Suggested Citation

Coble, David and Pincheira, Pablo M., Now-Casting Building Permits with Google Trends (February 1, 2017). Available at SSRN: https://ssrn.com/abstract=2910165 or http://dx.doi.org/10.2139/ssrn.2910165

David Coble

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

Pablo M. Pincheira (Contact Author)

Adolfo Ibanez University - School of Business ( email )

Diagonal Las Torres 2640
Peñalolén
Santiago
Chile

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