ZT from New2OC

oc bear,

I was just thinking about this today. Here are 10 hypothetical sales:
$1,050,000
$1,000,000
$950,000
$925,000
$650,000
$625,000
$600,000
$575,000
$550,000
$500,000

The median here is $637,500, with an average of $742,500 for 10 sales.

Now, next month, suppose the market is drying up, and 30% fewer (identical) homes have sold, all from the low end. And, to make things worse, the remaining (identical) houses sell for 30% less. Using the top seven values from this example, and reducing their price by 30% (and eliminating the sale of the bottom three houses).

The house sale prices are now (same houses with 30% drop, no low end sales):
$735,000
$700,000
$665,000
$647,500
$455,000
$437,500
$420,000

The median here is $647,500, with an average price of $580,000.

The median is up 1.6%, so all is well, right? The NAR is more than happy to report the median. In fact, I suspect that the median may be more insensitive to downside movement than upside. If all 10 houses still sold at a 10% price increase, the median would move up 10%. However, if prices are falling as volume is falling, the median may remain stationary.