When you're house hunting, the location of a home plays a huge role in how much it costs. The "median home price" is a term that helps us understand what prices are like right in the middle of the market.
It's helpful for buyers to get an idea of what they might spend and for sellers to know how much their house might be worth.
Median vs. Average Prices: What's the Difference?
To figure out what most people are paying for homes, we use two math concepts: median and average. While they sound similar, they're different. The median price is the middle number in a list of home prices, and it gives us a good idea of what's typical.
The average is all the prices added up and divided by how many there are, but this can be misleading if there are really cheap or really expensive homes in the mix.
For example, if six houses sold for these amounts: $150,000; $300,000; $350,000; $400,000; $450,000; and $1,200,000, the average price would be $475,000.
But that's skewed because of the $1.2 million house. The median would be $375,000, a better reflection of most prices.
How Much Does a Home Cost in the U.S.?
As of December 2024, the median house in the U.S. costs about $427,179. This is a slight drop from the month before but still represents a significant increase of 44.1% compared to five years ago.
Home Prices Vary By State
Just like each city has its own vibe, the cost of living there varies too. Places with lots of jobs and things to do usually cost more. Also, homes near natural beauty like lakes or mountains are pricier.
As of December 2024, the most expensive homes were in California ($802,300), Hawaii ($759,500), and Washington D.C. ($630,000). The most affordable states were Iowa ($230,000), Oklahoma ($241,000), and West Virginia ($245,700).
Will Homes Become More Affordable?
The cost of homes has been a big issue for buyers. Prices went way up during the pandemic but started to level off in 2023 and 2024.
Experts think mortgage rates might drop in 2025, which could make homes more affordable again. However, it could also make more people want to buy, pushing prices up.
Should I Buy a Home in 2025?
Those looking to buy a home in 2025 might see better mortgage rates and more homes on the market than in 2024.
The key is to buy when you can afford it without stretching your budget too thin. Remember, owning a home can help you build wealth over time, especially as its value goes up.
Conclusion
Across such a big country, it's no surprise home prices vary so much state by state. If you're thinking about buying a home, plan your budget carefully and explore if there are any government grants or programs in your state to help with the cost.
Check out: Is It Possible to Buy a Home Without a Down Payment?
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