Industry NewsOpinion

Damned lies and median house prices

Guest perspective: Stats are often misinterpreted

One of the most commonly referenced statistics in the real estate industry is the median sales price of homes. Many articles are published in newspapers the day after the National Association of Realtors releases its quarterly Metropolitan Area Existing-Home Prices report with conclusions about the healthy or unhealthy state of the local real estate market. Unfortunately the median sale price is frequently taken out of context and misinterpreted. Even someone who slept through most of their math classes will remember that the arithmetic mean and median statistics are different for the same data set. The average is the sum of the numbers divided by however many numbers you started with. The median is the number in the middle, when the numbers are listed in order. The reason that the mean or average sale price for a market area can be misleading is intuitively obvious and that's why it's rarely cited. A few sales in the extreme luxury segment of a market -- think $30 million or more i...