Demand for vacation homes dropped sharply for the second month in a row in March, with mortgage-rate locks for second homes at their lowest level since May 2020. 

Demand for vacation homes was still up 13% from pre-pandemic levels, but it's declining after a pandemic-fueled second-home boom last year. Still, we expect demand for second homes to remain above pre-pandemic levels in the future, as remote work is here to stay for many Americans.  

The slowdown in demand for vacation homes joins other early signals that the historically fast rise in mortgage rates and record-high home prices are pricing out some buyers. 

"The pandemic-driven surge in sales of vacation homes is coming to an end as mortgage rates rise at their fastest pace in history, causing some second-home buyers to back off," said Redfin Deputy Chief Economist Taylor Marr. "When rates and prices shoot up so much that a vacation home starts to look more like a burden than a good investment and a fun place to bring your family on the weekends, a lot of prospective buyers have second thoughts. The new second-home loan fees that kicked in on April 1 were also a deterrent. Plus, some buyers' down payments–and their nerves–probably took a hit when the stock market dipped over the last few months."