Once-hot second-home cities and towns are feeling the pinch of economic uncertainty somewhat more so than non-seasonal locations, according to research from Redfin, which found that sales in those places slipped 3% year-over-year in July vs. just a 1% dip in other spots.
The July slide continues a trend that began in February. Nearly one out of every 10 sales are in vacation communities, which Redfin defines as those where more than 30% of the housing stock is used only seasonally or occasionally.
The brokerage attributes the falloff to the fact that second homes or investment properties are usually the first to be cut when affordability is an issue.
“Many Americans who might have bought a vacation home a few years ago are now holding off, partly because of high costs and economic uncertainty,” said Daryl Fairweather, Redfin’s chief economist.
New listings are growing, just as they are in places where primary houses are the order of the day. But these vacation locations are seeing a larger surge.
The supply of properties for sale in vacation destinations jumped 17% year-over-year in July, whereas it grew 14% in other places. But the number of new listings for the month fell 3% vs. 2% in non-seasonal locations. That’s the largest decline in nearly two years, Redfin said.
At the same time, another Redfin analysis found that mortgages for second homes in the U.S. dropped in 2024 to their lowest level in at least six years. While demand for all homes fell last year, the decline was greater for second homes than for primary residences because, Redfin posited, (1) they’re more expensive, (2) they’re not a necessity, and (3) the economy is uncertain.
Additionally, many Americans no longer have the freedom to work remotely from a vacation spot that many enjoyed during the height of the pandemic.
Other factors influencing the second home sector: For one thing, the uncertain U.S. economy may mean short-term rentals get fewer bookings for less money. For another, the vacation rental market is saturated in some places, with heavy competition pushing down prices and profits.
Redfin says tightened short-term rental regulations are making it more time-consuming and difficult to manage a second home as a rental property. In the Los Angeles metro area, for instance, many owners have pulled their listings off sites like Airbnb and VRBO because of regulatory red tape, reported Nikkolene Byron, a Redfin agent in Palm Springs, Calif.
Elsewhere, strong competition for tenants is pushing down both rental rates and sales prices. The median asking price in seasonal spots is still more than $100,000 higher than in other places. But with sluggish sales, the median price has remained relatively flat.
The median in vacation hot spots was $583,000 in July, unchanged from a year earlier. In non-seasonal towns, the median price came in at $451,000, up 2% from July 2024.
“Most house hunters are sitting on the sidelines, waiting for mortgage rates to come down, and the people who are buying are looking for a deal,” said Ann Marie Rigali, a Redfin agent in Vail, Colo.
It’s worth noting that the frosty Florida market, which is home to more than a third of the seasonal locations included in Redfin’s analysis, has an outsized impact on the vacation home report. Of the 288 seasonal towns included in the report, 104 of them are in the Sunshine State.
Pending home sales are falling faster in Miami and Fort Lauderdale, Fla., both of which are considered seasonal locations, than any other major U.S. metro area. “The local condo market is brutal,” contended Cecilia Cordova, a Redfin agent in Miami.
