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  • Writer's pictureWWH

Why Relying on Median Home Prices Can Be Misleading

The National Association of Realtors (NAR) regularly releases its Existing Home Sales (EHS) report, which provides insights into sales volume and price trends for pre-owned homes. However, relying solely on the median home price can be misleading. While the EHS report may indicate falling prices, other reports suggest a different narrative. This discrepancy arises from the varying methodologies used by different sources.


The NAR's report focuses on the median sales price, which represents the middle value, with half of the homes selling for a higher price and half for a lower price. On the other hand, other reports employ repeat sales prices, which track changes in prices for the same properties.


The challenge lies in the fact that the median price can be distorted by the mix of homes sold. While the median price may decline due to the sale of more lower-priced homes, the individual values of homes may still be rising. Repeat sales indexes, such as Case-Shiller and FHFA, provide a more reliable measure of price trends.


It is important to remember that the median home price is not an accurate reflection of changes in home values. Buyers typically consider the affordability of monthly mortgage payments rather than the price alone. Higher mortgage rates may lead to the sale of more affordable homes, causing the median price to decline. However, this does not mean that individual homes have lost value.


To gain a more comprehensive understanding of home price trends, it is advisable to consult with a local real estate professional. They can provide valuable insights and help navigate the complexities of the market.

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