ORLANDO, Fla. – May 6, 2013 -- Consumers are eager to learn about the prices of homes and where they’re heading. As a real estate expert, you can use median price information to talk with your clients. You can use the trends in the Case-Shiller Home Price Index.

The latest Case-Shiller report indicated home prices across the country rose 9.3% year-over-year in February 2013. Meanwhile, the National Association of Realtors reported an 11.6% increase for the median sale price in February. Understanding the difference between a home price index and median prices will help you demonstrate knowledge of market trends and home valuation with your customers.

Let’s start with median prices. Imagine you are a Realtor in Micro City. Micro City had one home sale of $150,000 last year and a $165,000 sale this year. Since each year only had one sale, each represents the median price. The median price improved 10%. Now think about what you know about these homes. There is only one piece of information we have – the sale price. What other factors could affect the price? The homes may have different square footage, have a different number of bedrooms or bathrooms, and other characteristics. The price increase may be explained since the $150,000 home is 1300 sq. ft. and the $165,000 home is 1650 sq. ft.; then it would not be due to price appreciation.

Median price overlooks the change in market composition. On the other hand, a price index is a same sales index. Same sales means you look at the same house selling at different periods of time. Since the same house is being compared, the square footage, number of beds and baths, and other characteristics are held constant – price changes will only result from an increase in value.

Price indices are useful to see true price improvement. Unfortunately, they tend to lag (the most recent Case-Shiller data is two months behind) and are generally not tailored to local markets since not enough sales occur. Therefore, don’t discount median price trends. The trends will show the direction a market is headed. You know the composition of your market. Putting both median price changes and the types of homes listed in your market together will allow you to explain whether median price improvements indicate a change in market composition or a rebounding market.

The most recent Florida statistics are available on floridarealtors.org/Research. The current market reports show median prices for the state, metropolitan statistical areas (MSAs), and counties. Florida Realtors® also produces a price index report for the state and MSAs available to you. Adding data numbers to your hands-on experience in your local market provides you with an upper edge in talking to clients.