{"id":5896,"date":"2023-05-17T13:36:56","date_gmt":"2023-05-17T13:36:56","guid":{"rendered":"https:\/\/twolakeshomes.com\/what-you-need-to-know-about-home-price-news\/"},"modified":"2023-05-17T13:36:56","modified_gmt":"2023-05-17T13:36:56","slug":"what-you-need-to-know-about-home-price-news","status":"publish","type":"post","link":"https:\/\/twolakeshomes.com\/2023\/05\/what-you-need-to-know-about-home-price-news\/","title":{"rendered":"What You Need To Know About Home Price News"},"content":{"rendered":"
The <\/span>National Association of Realtors<\/em> (NAR) will release its latest <\/span>Existing Home Sales Report<\/em><\/a> tomorrow. The information it contains on <\/span>home prices<\/a> may cause some confusion and could even generate some troubling headlines. This all stems from\u00a0the fact that NAR will report the median sales price, while other home price indices report <\/span>repeat sales prices<\/a>. The vast majority of the repeat sales indices show prices are <\/span>starting to appreciate<\/a> again. But the median price reported on Thursday may tell a different story.\u00a0<\/span><\/p>\n Here\u2019s why using the median home price as a gauge of what\u2019s happening with home values isn\u2019t ideal right now. <\/span>According<\/a> to the <\/span>Center for Real Estate Studies<\/em> at <\/span>Wichita State University<\/em>:<\/span><\/p>\n \u201cThe median sale price measures the \u2018middle\u2019 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 \u2018composition\u2019 of homes that have sold.<\/em>For example, if more lower-priced homes have sold recently, the median sale price would decline (because the \u201cmiddle\u201d home is now a lower-priced home), even if the value of each individual home is rising.\u201d<\/em><\/strong><\/p>\n People <\/span>buy homes<\/a> 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>affordable<\/a>.\u00a0More \u2018less-expensive\u2019 houses are selling right now, and that\u2019s causing the median price to decline. But that doesn\u2019t mean any single house lost value.\u00a0<\/span><\/p>\n Even NAR, an organization that reports on median prices, acknowledges there are limitations to what this type of data can show you. NAR <\/span>explains<\/a>:<\/span><\/p>\n \u201cChanges in the composition of sales can distort median price data.\u201d<\/em><\/p>\n For clarification, here\u2019s a simple explanation of <\/span>median value<\/em>:<\/span><\/p>\n You have three coins in your pocket. Line them up in ascending value (lowest to highest).<\/span>If you have one nickel and two dimes, the median value of the coins (the middle one) in your pocket is ten cents.<\/span>If you have two nickels and one dime, the median value of the coins in your pocket is now five cents.<\/span>In both cases, a nickel is still worth five cents and a dime is still worth ten cents. The value of each coin didn\u2019t change.<\/span><\/p>\n