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The median home price is the price in the middle of the dataset when you arrange all the home prices from low to high.

If you’re researching potential properties or just dipping your toes in the housing market, you’ve likely heard the term “median home price” thrown around. But what does it mean and when should you consider it important?

In any dataset –  whether it’s home prices or grades in a classroom – “median” refers to the number located in the very middle of the set (when arranged from lowest to highest.) As an example, let’s say homes sold in Chicago today came in at:

 

  •       $246,000
  •       $299,000
  •       $384,000 <= median
  •       $406,000
  •       $1,000,000

 

The number $384,000 – which is situated right in the middle of the list – would be the median home price. Generally, median home prices are used in conjunction with average home prices to give a full picture of a local housing market. The two terms might sound similar, but they actually have quite different meanings when it comes to setting price expectations for an area.