<article class="post-693198 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-693198"><span class="entry-date">May 17, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">What You Need To Know About Home Price News</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+You+Need+To+Know+About+Home+Price+News&url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-you-need-to-know-about-home-price-news%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="What You Need To Know About Home Price News Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20230517-what-you-need-to-know-about-home-price-news.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p><span style="color: rgb(33, 33, 33);">The </span><em style="color: rgb(33, 33, 33);">National Association of Realtors</em><span style="color: rgb(33, 33, 33);"> (NAR) will release its latest </span><a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales" rel="noopener noreferrer" style="color: blue;" target="_blank"><em>Existing Home Sales Report</em></a><span style="color: rgb(33, 33, 33);"> tomorrow. The information it contains on </span><a href="https://www.simplifyingthemarket.com/2023/05/16/the-worst-home-price-declines-are-behind-us/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">home prices</a><span style="color: rgb(33, 33, 33);"> may cause some confusion and could even generate some troubling headlines. This all stems from the fact that NAR will report the median sales price, while other home price indices report </span><a href="https://www.investopedia.com/terms/r/repeatsales-method.asp" rel="noopener noreferrer" style="color: blue;" target="_blank">repeat sales prices</a><span style="color: rgb(33, 33, 33);">. The vast majority of the repeat sales indices show prices are </span><a href="https://www.simplifyingthemarket.com/2023/05/12/the-worst-home-price-declines-are-behind-us-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">starting to appreciate</a><span style="color: rgb(33, 33, 33);"> again. But the median price reported on Thursday may tell a different story. </span></p>
<p><span style="color: rgb(33, 33, 33);">Here’s why using the median home price as a gauge of what’s happening with home values isn’t ideal right now. </span><a href="https://realestate.wichita.edu/question/hpi-vs-median-price/#:~:text=The%20median%20sale%20price%20measures,and%20half%20sold%20for%20less" rel="noopener noreferrer" style="color: blue;" target="_blank">According</a><span style="color: rgb(33, 33, 33);"> to the </span><em style="color: rgb(33, 33, 33);">Center for Real Estate Studies</em><span style="color: rgb(33, 33, 33);"> at </span><em style="color: rgb(33, 33, 33);">Wichita State University</em><span style="color: rgb(33, 33, 33);">:</span></p>
<blockquote><p><em style="color: rgb(33, 33, 33);">“The median sale price measures the ‘middle’ price of homes that sold, meaning that half of the homes sold for a higher price and half sold for less. While this is a good measure of the typical sale price, it is not very useful for measuring home price appreciation because it is affected by the ‘composition’ of homes that have sold.</em></p></blockquote>
<blockquote><p><strong style="color: rgb(33, 33, 33);"><em>For example, if more lower-priced homes have sold recently, the median sale price would decline (because the “middle” home is now a lower-priced home), even if the value of each individual home is rising.”</em></strong></p></blockquote>
<p><span style="color: rgb(33, 33, 33);">People </span><a href="https://www.simplifyingthemarket.com/2023/05/03/buyer-activity-is-up-despite-higher-mortgage-rates/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">buy homes</a><span style="color: rgb(33, 33, 33);"> based on their monthly mortgage payment, not the price of the house. When mortgage rates go up, they have to buy a less expensive home to keep the monthly expense </span><a href="https://www.simplifyingthemarket.com/2023/04/28/ways-to-overcome-affordability-challenges-in-todays-housing-market-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">affordable</a><span style="color: rgb(33, 33, 33);">. More ‘less-expensive’ houses are selling right now, and that’s causing the median price to decline. But that doesn’t mean any single house lost value. </span></p>
<p><span style="color: rgb(33, 33, 33);">Even NAR, an organization that reports on median prices, acknowledges there are limitations to what this type of data can show you. NAR </span><a href="https://www.nar.realtor/newsroom/existing-home-sales-slid-2-4-in-march" rel="noopener noreferrer" style="color: blue;" target="_blank">explains</a><span style="color: rgb(33, 33, 33);">:</span></p>
<blockquote><p><em style="color: rgb(33, 33, 33);">“Changes in the composition of sales can distort median price data.”</em></p></blockquote>
<p><span style="color: rgb(33, 33, 33);">For clarification, here’s a simple explanation of </span><em style="color: rgb(33, 33, 33);">median value</em><span style="color: rgb(33, 33, 33);">:</span></p>
<ul>
<li><span style="color: rgb(33, 33, 33);">You have three coins in your pocket. Line them up in ascending value (lowest to highest).</span></li>
<li><span style="color: rgb(33, 33, 33);">If you have one nickel and two dimes, the median value of the coins (the middle one) in your pocket is ten cents.</span></li>
<li><span style="color: rgb(33, 33, 33);">If you have two nickels and one dime, the median value of the coins in your pocket is now five cents.</span></li>
<li><span style="color: rgb(33, 33, 33);">In both cases, a nickel is still worth five cents and a dime is still worth ten cents. The value of each coin didn’t change.</span></li>
</ul>
<p><span style="color: rgb(33, 33, 33);">The same thing applies to today’s </span><a href="https://www.simplifyingthemarket.com/2023/05/09/why-todays-housing-market-is-not-about-to-crash/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" style="color: blue;" target="_blank">real estate market</a><span style="color: rgb(33, 33, 33);">.</span></p>
<h3>SBottom Line</h3>
<p><span style="color: rgb(33, 33, 33);">Actual home values are going up in most markets. The median value reported tomorrow might tell a different story. For a more in-depth understanding of home price movements, reach out to a local real estate professional.</span></p>
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