Second home purchases are down from their pre-pandemic levels. Mortgage-rate locks on second homes were down 47 percent from their pre-pandemic levels as of Aug. 2023, just shy of a seven-year low seen in February when rate locks were down 52 percent from pre-pandemic levels
Second Home Demand is Lower
Remember when interest rates were at 3% and no one went into the office? Why stay in Washington DC when you could work from Rehoboth, an island off the coast of Maine or even Napa Valley! That has all changed as home costs have risen and employers have continued to draw their employees back to the office.
August’s decline in second home mortgage-rate locks was much steeper than the 33 percent decline in rate locks seen for primary homes from pre-pandemic levels, Redfin reported, based on data from real estate analytics firm Optimal Blue. August was the 14th consecutive month in which second-home demand has been at least 30 percent below pre-pandemic levels.
BEHIND THE NEWS: The mortgage rate lock figures are a stark contrast to those seen during the height of the pandemic, which hit a peak of 88.5 percent above pre-pandemic levels in October 2020 as mortgage rates hit record lows and homebuyers could work remotely from anywhere. Rate locks on primary homes also increased during the pandemic, but not by nearly as much — those hit a peak of 16 percent above pre-pandemic levels in late 2020.
Mortgage rates, which hit a two-decade high as of August, still-elevated home prices, the rising cost of goods and services, and an uncertain economy have all contributed to the decline in demand for both second home purchases and primary homes, Redfin noted.