High prices and reopening offices are making people rethink buying a second home, according to Redfin
The number of buyers who locked in a mortgage interest rate for a second home returned to pre-pandemic levels in May.
One segment of the real estate market is beginning to look a little more normal.
The number of buyers who locked in an interest rate for a mortgage on a second home returned to pre-pandemic levels in May after a year of high demand, according to a report by Redfin.
The report uses "rate locks" as a proxy for likely purchases, as it is one of the final stages of the purchase process and roughly 80% of locks are followed by a completed sale.
Demand for vacation homes increased in May by 48% over the same month last year, showing growth is continuing but at a more moderate rate, according to the data. For most of the pandemic, second-homes were selling at roughly twice the rate as they did the year before. The latest data indicates more normal market conditions are ahead.
The brokerage cited rising prices and reopening offices for the slowdown, as well as new lending rules that may have led to fewer mortgages being written.
"Vacation-home buyers are quicker to back away from properties that are potentially overpriced because they're not a necessity," Redfin chief economist Daryl Fairweather said in a statement.
"The pandemic and remote work drove many affluent Americans to relocate to vacation destinations, at least part of the time," she added. "But with offices reopening and life returning to some semblance of normal, people are less focused on fleeing to the beach or the lake."
Meanwhile, mortgage rate locks for primary homes increased in line with the elevated pandemic trend.