When we release our monthly market report, STAT, it brings up a question: What’s the difference between the average and median sales price and which is better?
Average Sales Price
The average sales price for September 2012 was $198,800. All sales are added together and divided by the number of sales to derive the average sales price.
Median Sales Price
The median sales price for September 2012 was $150,000. All sales are lined up in a list ordered from lowest to highest, the sale in the middle of the list, is the median sales price.
Which is method is better?
While it can be debated, many consider the median sales prices to be a better indicator of the market. This is because the average sales price tends to be skewed by outliers, mainly multimillion dollar properties. Look at this example below:
The median sales price would be $146,000 and average sales price would be $283,285. Regardless, we provide both the average and median sales prices in STAT,