Median sale price in an area fell 6 percent while median price per square foot rose 2 percent. What does this most likely indicate?
Correct Answer
C) Smaller properties made up more of the sales
Why this is correct: The median sale price is the middle sale price of all properties sold. The median price per square foot is the middle rate of all sales. If the median price fell but the per-square-foot rate rose, it indicates the mix of properties sold shifted toward smaller homes. Smaller homes sell for lower total prices (lowering the median sale price) but can have a higher price per square foot, explaining the divergence. Why the other choices are wrong: 'One of the two figures has been computed wrongly' is unlikely without evidence; these statistics often diverge due to market composition. 'Prices fell for every property in that market' would cause both metrics to fall, not diverge. 'The market conditions adjustment should be negative' is incorrect; the rising price per square foot suggests underlying strength, not a negative trend. Exam tip: When median price and price per square foot move in opposite directions, suspect a change in the size or quality mix of sold properties.
Why This Is the Correct Answer
Why this is correct: The median sale price is the middle sale price of all properties sold. The median price per square foot is the middle rate of all sales. If the median price fell but the per-square-foot rate rose, it indicates the mix of properties sold shifted toward smaller homes. Smaller homes sell for lower total prices (lowering the median sale price) but can have a higher price per square foot, explaining the divergence. Why the other choices are wrong: 'One of the two figures has been computed wrongly' is unlikely without evidence; these statistics often diverge due to market composition. 'Prices fell for every property in that market' would cause both metrics to fall, not diverge. 'The market conditions adjustment should be negative' is incorrect; the rising price per square foot suggests underlying strength, not a negative trend. Exam tip: When median price and price per square foot move in opposite directions, suspect a change in the size or quality mix of sold properties.
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