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Median sales price can be subject to skew by consumer behavior more than math

Here’s an updated excerpt from my Housing Note newsletter dated October 28, 2016, digging into the median sales price. You can subscribe to Housing Notes [1] and other housing resources for free.

I wrote about the median sales price a decade ago [2], and the message still holds. A couple of years ago, I whipped up a table that shows how median sales price can perform in a changing housing market. The median sales price is the default price trend indicator of real estate because it eliminates the extreme highs and lows of a data and merely represents the middle number. However, it is also subject to skew by consumer behavior that can overpower the math. So I always provide two to three price trend indicators depending on the quality of available information (average sales price, median sales price, median sales price) for all of the reports in my Elliman Report Series [3]. The relationship between median and average sales price can also tell a story [4].

Click on the graphic below to expand.

medianexplained [5]