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Why “Median Sales Price” Reports Aren’t Helpful For Housing Markets

2008
03.27

Each month, the Commerce Department and the National Association of REALTORS release national housing data.

The former’s release is called the New Residential Sales report and the latter’s is called the Existing Home Sales report.

Both reports highlight the “median sales price”, the point at which half of the homes in the U.S. sold for more, and half sold for less.

Last month, the median sales prices were as follows:

The very definition of “median”, however, makes this data point useless for national housing statistics.

If a large amount of homes are sold in regions where home prices are traditionally high, the median sales price will trend higher.

If a large amount of homes are sold in regions where home prices are traditionally low, the median sales price will trend lower.

Again, all that the median sales price tells us is the price point at which half the homes in the country sold for more, and half sold for less.

Real estate is a local phenomenon and so grouping the entire country’s supply of homes together makes little sense. A home in San Francisco has little to do with a home in Omaha.

To get a true gauge of your local market, talk to a real estate agent that knows the local market well. You’ll not only get meaningful statistics about a neighborhood, but you’ll get good insights, too.

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