In the NAHB Economic and Housing Executive-Level Forecast, what does the “% Change AR” mean?
The term “% Change AR” means “percentage change at an annual rate”. It answers the question, “If the percentage change for total housing starts between two consecutive quarters were to persist for an entire year, what would the annual percentage rate of change be?” This is roughly equivalent to taking the quarterly rate of change and multiplying by 4. For example, assume total housing starts were 1,965 in fourth quarter 2004 and 2,069 thousand in first quarter of 2005(rounded to the nearest thousand). The quarterly percentage change for these numbers is 5.29%. Multiplying by 4 gives you 21.17%. However, to be completely accurate, quarterly compounding must be taken into account (and is the method used to calculate the numbers reported in our tables). Thus, in this case, the annualized rate of change is 22.91% rather than 21.17%. For this example we rounded housing starts to the nearest thousand. When we do the calculation, we use unrounded numbers. Hence, the reported compounded percen
