Low mortgage rates are pushing home prices, but so is lack of inventory.
What is median price?
Median price is the middle point for real estate prices. It is not the same as the average price. The median price is the price in the very middle of a data set, with exactly half of the houses priced for less and half priced for more.
Median price is a better indication than average price of a property’s value and the local real estate market. Real estate professionals refer to the median price rather than the average price because it is less affected by outliers or properties that skew the perceived values in a particular housing market. A house that sells for far more or far less than most houses in the area will skew an average price.
Looking at median prices helps a buyer make an educated decision on where and when to buy a house. Rising median prices indicate a seller’s market, while falling median prices indicate a buyer’s market.
Use Bankrate’s calculator to help you determine how much house you can afford to buy.
Median price example
To find the median price, look for the price in the middle of this list, which is $500,000. In this instance, the median price and the average price of $464,285.71 are not too far apart. Looking at median prices can alert a buyer to properties that are overpriced for the local market.
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