Redfin data indicates that mortgage rate locks for second homes were nearly 47% lower compared to pre-pandemic levels on an unadjusted seasonally adjusted basis in August than they were for primary homes (33% decline).

August marks 14 months of second-home demand dipping at least 30% below pre-pandemic levels due to rising housing costs and limited inventory, deterring potential buyers. Rate locks for second homes hit an all-time low last February; 52% below pre-pandemic levels.

Mortgage-rate locks are agreements between homebuyers and lenders that allow the homebuyer to lock-in an interest rate for a set period. Roughly 80% of rate locks result in purchases.

Demand for second homes has also decreased compared with a year ago; mortgage-rate locks for second properties fell 19% year-over-year, more than the 14% drop seen among primary properties.

Mortgage locks for vacation homes saw their numbers skyrocket during the pandemic, rising 88.5 percent above pre-pandemic levels by October 2020 and reaching their highest peak point. Affluent Americans took advantage of record-low mortgage rates to snap up second homes at record-low mortgage rates when many could work remotely from vacation towns. Demand also increased significantly for primary homes during this time, reaching 16% above pre-pandemic levels by late 2020.

High prices and loan fees, coupled with declining rental property appeal, discourage second-home buyers.

Mortgage rates reached their two-decade high in August, reducing demand for both primary and second homes. Still-high home prices, an uncertain economy, and lack of new listings also hampered buyers from purchasing either type.

Due to multiple factors, vacation home demand has fallen substantially:

Home ownership costs more when buying a second property. A typical seasonal town–where many second homes are situated–sells for $564,000, up 5% since last year compared with $4211,000 in non-seasonal towns where mortgage rates tend to be higher and the federal government increased loan fees tens of thousands of dollars higher in 2022, adding further to the expense.
Many workers are returning to the workplace. With many companies inviting workers back at least part of the time, second homes no longer hold as much appeal for many employees.
Short-term rentals have become less appealing. Owning a vacation home and renting it out on sites like Airbnb may no longer be as financially advantageous, particularly as local governments including New York City enact new short-term rental regulations with taxes and tight permitting requirements that eat away at profits while making the business harder to run.
Long-term rentals are starting to decline and buying vacation homes to rent long term are less appealing. Rental market activity has subsided from its peak; asking rents are still high but more landlords are offering concessions as a means of attracting tenants; additionally there’s an increasing number of vacancies that need filling soon after new units hit the market.