Demand For Second Homes Falls For First Time In A Year

For the first time since the COVID-19 pandemic began, the number of homebuyers who locked in mortgage rates to purchase a second home went into a year-over-year decline, according to data from the real estate brokerage Redfin RDFN.

What Happened: Last month saw an 11.1% year-over-year drop in the demand for second homes, the first decline since April 2020 and a dramatic reversal after a yearlong surge that saw double- and triple-digit increases in second home mortgage locks.

"Demand for second homes is dropping back down to earth as many employees return to the workplace this summer," said Taylor Marr, Redfin's lead economist. "That return to the office, along with soaring prices and tighter lending standards for second homes, is shifting homebuyer demand in favor of primary residences."

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What Else Happened: Despite the declining demand, home prices in the seasonal towns where second homes are often located were up 28% year-over-year to $468,000 in June. This was the twelfth consecutive month where annualized price growth for homes in these markets was higher than 10%.

In comparison, home prices in non-seasonal towns during June were up 26% to $421,000, which marked a narrowing of the price growth gap between seasonal and non-seasonal towns.

The greatest gap between the two markets occurred last September when prices in seasonal towns increased 22% year over year, versus 13% for non-seasonal towns.

Photo: Paul Brennan/Pixabay.