# Which statistical measures should be applied in order to draw correct conclusions about the residential market? The purpose of this article is to compare indices applied in analyses of the residential market. Using a more precise statistical analysis of price distribution, I will attempt to present differences between the following measures of central tendency: the mode, the median and the mean, which will allow to answer the question, which of these should be considered in order to provide the most accurate analysis of market changes and market situation.

Measures of central tendency define the location of „average values of the distribution”. They can be further divided into measures of position and classic measures. Measure of position is a value occurring in a specific statistical unit. Examples of such measures are e.g. the median (the value of the middle unit) or the mode (the value of the most frequent unit). On the other hand, the classic measure is calculated based on all researched units occurring in the set, e.g. the arithmetic mean or the geometric mean.

When analyzing prices occurring in the residential market, REAS uses the three measures of central tendency defined below regarding the prices of residential units calculated per one square meter of usable floor area.

The median – the price of the middle unit in the set. In order to understand this measure better, one should imagine that all residential units have been arranged according to their price per one square meter from the cheapest to the most expensive unit. Perceived in this manner, the median is the price of the middle dwelling in this line.

The mode – the price occurring most frequently in the market, characteristic of the highest number of residential units.

The mean – the average price in the market is calculated as the arithmetic mean of prices of all residential units in all projects, considering that in such calculations every dwelling– regardless of its floor area – is represented by one number.

The distribution of prices in the residential market is most frequently unimodal and is positively skewed (it has one distinct peak and its elongated tail extends to the right part of the distribution), which means that usually we can observe the following inequality: 