Skip to content 
April 29, 2024 | Reading Time: 2 Minutes
The term “median home price” often gets tossed around, but what does it really mean? Let’s break it down. “Median” simply refers to the middle value in a set of numbers when they’re arranged from lowest to highest. It’s not an average; it’s that middle point.
But despite its straightforward definition, we often hear conflicting statements like “median home prices are dropping” alongside claims that “home prices are going up.” How do we reconcile these differences? Let’s walk through an example.
Imagine we have five homes sold in 2022, with prices ranging from lowest to highest. The middle value, or median, is $270,000. Now, fast forward to 2023, and due to a 6% appreciation in home values, all five homes have increased in price. However, only three homes sell this time, and they happen to be the three lowest-priced ones. As a result, the new median home price appears lower.
The media might jump on this and declare that home prices are dropping based on the median, but that’s not the full story. The reality is that appreciation has occurred; it’s just the mix of homes being sold that’s influencing the median.
Recently, there was buzz about a 2.3% decrease in the median home price for new home sales, leading some to speculate about plummeting prices. However, when we dig into the data, we see a more nuanced picture. The drop in median price was driven by fewer sales in the higher price range, not an actual decline in home values.
Understanding these nuances is crucial, especially when it comes to negotiating a sales price and interpreting media reports. While math can be challenging, it’s important to understand the true state of the housing market amidst the noise of sensationalized headlines.
