Logo
May 25, 2022

Real Estate Terms: Median vs. Average

Hands typing on calculator

If you’re in the market for a new home, you’ve probably noticed monthly statistics related to your housing market being released in the news and online. These statistics are displayed in paragraphs, with trend lines, bar graphs, or comparative charts. Typically, the number of sold transactions is reported – how many houses have sold within the geographic area and time period. The closed median sale price is reported as well.


You may be asking, how does the median price help you understand the local housing market?


Here’s a refresher on a math lesson you may have learned in school – mean vs median.


Mean a.k.a. Average


The mean, aka average, is the sum total of all of the numbers divided by the quantity of items. The mean is used when all items in a set are directly comparable.


Take this lunch menu.

Lunch specials menu

When you add all of the prices and divide by the quantity (9) on the board, you find the average price of a lunch special is $8.16.


A customer could expect to spend approximately $8.16 for lunch on a sandwich. Some lunches would be more expensive and some would be less, but they’re all approximately $8.16 for the same value – a sandwich, a soup or salad, and a beverage. Not a bad deal!


But now consider when items are not directly comparable. Consider this list of prices from a local garage sale.

Garage sale today price list

The average price of an item at this garage sale is $38.92. (The total price $467 divided by 12 items is approximately $38.92.)


Look back at the list of items. Many of them fall below that average dollar amount. In fact, with only $15, one could buy nearly any of the items at the sale.


The lawnmower throws the average off. It’s an outlier with a much higher asking price than the rest of the items. It isn’t really comparable to most of the items in the sale either.


This is when the median is helpful.


Median


The median is the middle number of a set. When all items are lined up from least to greatest, the median is the central number to the set. This is especially useful when there are outliers and a wide range of prices.


The median of the set is $4 (between the two middle numbers $3 and $5). That is a much better representation of the price of garage sale goods.


Housing Market


Just like the lawnmower at the garage sale, the same is true for the housing market, but on a much larger scale. In every geographic region, there are homes that are outliers. There are plots of land and fixer uppers in need of a lot of TLC, which are sold for a very low price. There are much more expensive outliers that offer comparably more land, rooms, and features than most others in the area. These high-priced and low-priced homes may skew the average sale price of homes in the area.


The median sale price is a valuable statistic because that it better represents the selling price of the majority of homes in the geographic area.


If you have questions about Medians, Averages, or any of the complex statistics associated with the housing market, speak to a Realtor®. For the most up-to-date housing statistics, please visit www.onekeymls.com/market-statistics.

You may be interested in:

A magnifying glass , pen , and a model house are on a wooden table representing a chart.
March 28, 2025
The Market Outlook from the REALTORS® Confidence Index for sellers increased compared to last month.
A homeowners association document is sitting on a wooden table next to a pen and a book.
March 28, 2025
In many housing markets, homeowners associations (HOAs) and other community associations can be a part of the homebuying (and owning) experience. Here’s what prospective buyers should know:
A woman is kneeling down in front of a house holding a sign that says home for sale.
March 28, 2025
Once you decide to sell your home, your agent will work with you to determine the best strategy to reach potential buyers and attract strong offers. Here are some considerations when marketing your home:
A wooden house with the words property tax written on it
March 28, 2025
Wherever you buy a home in the United States, property taxes are a reality of homeownership. An agent who is a REALTOR® can help connect you with a tax expert in your area, but here are the basics:
A man is holding a sold sign in front of a house.
March 28, 2025
When your home is on the market, you may receive offers from multiple interested buyers. Offers can vary greatly, and you will need to determine which one is best for you. Here's what sellers should know:
A cardboard box with the words moving day written on it
April 1, 2024
As spring approaches, many homeowners gearing up to sell their homes face the daunting task of moving. However, with some innovative strategies and the right supplies, you can make the process smoother and more efficient. Here are five tips tailored specifically for home sellers embarking on a spring move:
A magnifying glass is sitting on top of a table next to two small houses.
April 1, 2024
As spring approaches and the real estate market begins to bloom, homeowners gearing up to sell their homes are undoubtedly eager to secure the best offer possible. The key to achieving this lies in understanding how real estate agents value properties and determine listing prices. Here's a glimpse into the process:
A family stands in front of a house for sale sign
April 1, 2024
Before making the decision to buy a home, it’s important to plan for all the costs you’ll be responsible for. While you’re saving for the down payment for your new home, don’t forget you’ll need to prepare for closing costs too.
a boy is sitting on a man 's shoulders looking at a house.
March 19, 2024
As the spring market approaches, prospective home sellers are gearing up to showcase their properties in the best possible light. One of the most crucial aspects of attracting potential buyers is curb appeal – the first impression your home makes from the street. Here's your comprehensive guide to preparing your home for the spring market and maximizing its curb appeal:
Show More
Share by: