How to Read Housing Market Data Without Getting Misled
Headlines about the housing market are designed to get clicks, not to help you make good decisions. Learning to read the actual data yourself gives you a real advantage.
Median Price vs. Average Price
Median price is the middle value — half of homes sold for more, half for less. It is more useful than the average, which can be skewed by a few very expensive or very cheap sales. A rising median price does not always mean homes are getting more expensive — it can also mean more expensive homes are selling while cheaper ones sit. Always look at median price trends over 6-12 months, not month-to-month changes.
Days on Market
Average days on market tells you how fast homes are selling. Under 30 days generally indicates a seller's market. Over 60 days suggests a buyer's market. But this number includes all properties — a home that sat for 200 days because it was overpriced can inflate the average. Look at the median days on market for homes similar to what you are buying.
Inventory and Months of Supply
Months of supply measures how long it would take to sell all current listings at the current pace of sales. Under 4 months: seller's market. 4-6 months: balanced. Over 6 months: buyer's market. This number directly affects your negotiation leverage. In a seller's market, expect competition. In a buyer's market, expect room to negotiate.
List-to-Sale Price Ratio
This shows what percentage of the asking price homes are actually selling for. A ratio over 100% means homes are selling above asking (common in competitive markets). Under 100% means there is room to negotiate below asking. This is one of the most practical numbers for setting your offer strategy.
Key Takeaways
- ✓Use median price trends over 6-12 months, not month-to-month or averages
- ✓Median days on market tells you how fast homes like yours are selling
- ✓Months of supply determines your negotiation leverage
- ✓List-to-sale price ratio tells you whether offers above or below asking are the norm
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