You’ve likely heard about the K-shaped economy. It has an impact on people, their living circumstances, and even their economic futures. Such bifurcations lead to haves and have-nots. The concept appears in many places in society. One of them is in house prices.
A comparison of median and average house prices shows the bifurcation and gives good news for those of middle or lower incomes while those who look for the upper end of housing will pay even more than it seems.
Revisiting Distributions
When you hear the typical cost of a U.S. house, how are people expressing them? Usually delivered as a single number that supposedly characterizes the overall experience.
However, collections of numbers are tricky when examined in the face of statistics. People often look at averages (the sum of all the examples that are then divided by the number of them) and medians (the middle point of the range of examples) and don’t pay attention to the difference.
Depending on the arrangement the values naturally fall into, the collection may form a normal distribution, a so-called bell curve with some specific characteristics. The average (or mean) and the median are the same. The standard deviation is a measure of the curve’s breadth. For a normal distribution, about 68% of the values are within one standard deviation of the mean, 95% within two, and 99.7% within three.
The distribution of housing prices is far from standard, as, over time, the mean and median have drifted further apart.
Median Versus Mean In Housing
The graph below comes from data and graphing facilities on the FRED (Federal Reserve Economic Data) site of the Federal Reserve Bank of St. Louis.
From 1963 through the mid-1970s, the mean and median were roughly identical. Starting in the first quarter of 1978, the two values began to diverge. In the second quarter of 1980, the average sales price of houses sold in the U.S. was $74,400; the median price was $64,000. The average was about 16.3% higher than the median.
Go to the other end of the graph in the second quarter of 2026. The average sales number was $502,700; the median sales price was $410,700. The average was 22.4% higher than the median.
When the median and the average drift apart, it tends to mean there’s an imbalance in the distribution. An average higher than a median happens when the values at the top of the collection become uncharacteristically larger compared to those below. The pattern is called top-weighted. When the average is lower than the median, the result is bottom-weighted, when figures are uncharacteristically lower than those compared to the ones above.
The prices for houses at the top of the spread have always been higher than those below, but the most expensive houses are much more costly than others.
Prices Slide Down
Both the average and median prices of homes have trended down since late in 2022 (Q4 for average, Q3 for median), with jagged volatility. Here’s a graph of this time period.
In Q3 of 2022, the median price of a house was $438,000. By Q2 2026, the median price had fallen to $410,700, a drop of 6.3% in 15 quarters. In Q4 of 2022, the average price of a house was $521,000. By Q2 2026, the average price was $502,700, a drop of 3.5% in 14 quarters.
If you want a house, first look at more modest properties. They are declining in price faster than the top-weighted average prices. At the current rate, in under two years, they will drop below $400,000. Also, these are national numbers. If you have employment flexibility, you could find an area where the prices are significantly lower.
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