Question about growth rates for average home prices

What makes you think it is possible? If you mean what you literally say, it is not.

Perhaps we should clarify what you're saying by using a specific example. Let's say home prices in the US grow by 5%. Home prices in each of the 50 states is less than 5%. If you're asking how this can be, my answer is that it can't.

Hi Thomas, thanks for the reply - here is the data I'm looking at -

Total Market

Total Units Total $ Volume Avg. Price
2005 10,876 4,268,418,649 392,462
2010 7,474 4,167,298,905 557,572
Growth Rate of average price 42.1%

Avg. Price data for sub-markets:

Market 1 Market 2 Market3 Market4 Market5 Market 6
2005 330,927 282,308 366,942 392,648 601,163 389,669
2010 451,824 384,858 521,620 544,862 835362 533903
Growth 36.5% 36.3% 42.2% 38.8% 39.0% 37.0%


The average price change from 2005 to 2010 is higher than all but one market (which is a small part of the total in volume terms). How can this be?

This can be if market #3 comprises 30-40 times as many sold units as the other five markets combined. I don't know why anyone would want to partition a housing market in such an unequal fashion. But I suppose it could happen. For example, it might happen if the market as a whole is Long Island, if one of the six parts is New York City (Brooklyn plus Queens), and if the other five parts represent the rest of Long Island. The rest of Long Island is suburban or rural, has fewer units, and its units may well change owners much less frequently. To be sure, I have no idea if Long Island is actually what we're looking at. But you know what I mean.

In this case, Market 3 is less than 10% of volume.

If you take a weighted average of the prices from each sub-market (weighted by unit sales, not dollar volume) , it matches the average for the whole market (or region) calculated from rolling up units and dollar volumes. However, the growth rate of the average price at the regional level still seems out of sync with the growth rates of the region's sub-markets. I'm stumped as to why.

In principle, you could skew relative growth if prices in each sub-markets start from a very unequal level, and most of the absolute growth happens in an unrepresentative sub-market. But in practice, I'm not getting that sense from your numbers. Very strange.

The total market increase is a weighted average figure.

The sub-market increases, in the table, are not weighted.