The Arizona MLS system has just recorded the highest-ever average monthly sales price across all areas and property types at $664,700. At first glance, this may seem inconsistent with current market conditions, where supply is plentiful, and overall demand remains below normal. However, the confusion lies in what the “average monthly sales price” actually represents. Many assume it reflects the typical home price, but that assumption is incorrect.

The average monthly sales price is calculated by dividing the total dollar volume of homes sold by the number of transactions. It measures what sold, not what is typical. In today’s K-shaped economy, higher-income households and asset-rich buyers remain active, particularly in the luxury segment. Meanwhile, lower and middle price ranges are seeing reduced participation because many buyers are either priced out or hesitant. This imbalance means a greater share of expensive homes in the sales mix, which naturally drives the average higher even if most buyers are not paying anywhere near that number.

A small number of ultra-luxury transactions can significantly distort the average. In February alone, two homes sold for $20 million or more and seven additional properties sold above $10 million. In February of the prior year, there were no sales above $15 million and only three above $10 million. That represents a dramatic expansion in the high end, with dollar volume in the ultra luxury segment rising 233 percent year over year, from $37.15 million to $123.75 million. When this many top-tier homes close in a single month, the average price surges.

To understand what a typical home is selling for, the median price is far more accurate. The median represents the middle transaction, where half of the homes sold above that number and half below. February’s median sales price is $450,000, well below the record high of $475,000 reached in May 2022. In fact, 76 percent of homes sold in February closed below the average price, which clearly illustrates why average does not mean typical. The headline average may be breaking records, but the median tells a much more grounded story about where the broader market truly stands.

“Every strike brings me closer to the next home run.” 
- Babe Ruth

Have a great week, everyone!