BAM Key Details: 

  • Vacation home mortgages dropped 40% year over year in 2023, falling to a six-year low. 
  • Data is based on Redfin’s analysis of Home Mortgage Disclosure Act (HMDA) data on primary home, second home, and investment property purchases from 2018 to 2023.

A new Redfin report shows a 40% annual drop in vacation home mortgages in 2023. 

Last year, U.S. homebuyers took out a total of 90,772 mortgages for second homes—40% fewer than the year before and 65% below the peak reached in 2021, falling to a six-year low. 


Source: Redfin

Meanwhile, mortgages for primary homes declined at half that rate, falling 20% compared to a year ago and 35% compared to 2021. 

That’s according to a Redfin analysis of Home Mortgage Disclosure Act (HMDA) data on purchases of primary homes, second homes, and investment properties from 2018 to 2023.

The terms “vacation home” and “second home” are used interchangeably in this report. 

Home purchases declined across the board in 2023

Last year saw a drop in home purchases across the board due to low housing inventory, elevated mortgage rates, and high home prices, all of which combined to make 2023 the least affordable year on record for housing. 

And based on the most recent data, affordability hasn’t improved in the early months of 2024. In fact, monthly housing costs have reached an all-time high. 

Mortgages for vacation homes declined more than primary home mortgages for a number of reasons: 

  1. It costs more to buy a second home: The typical vacation home cost $475,000 in 2023, compared to $375,000 for the typical primary home. Also, the federal government increased loan fees for vacation homes in 2022, raising the cost of buying one. 
  2. Vacation homes are not a necessity: Primary homes are a must, but second homes are not. And when housing costs go through the roof, even those in a position to buy a vacation home are more likely to think twice about it. 
  3. Buying a vacation home for personal use is a less attractive proposition right now compared to a few years ago because many employers are now calling their staff back to the office, leaving the latter less time to spend in vacation homes. 
  4. Buying a second home to rent it out is also less attractive compared to a few years ago since the rental market has cooled from its pandemic peak and short-term rental owners on sites like Airbnb have seen a drop in revenue. 

The percentage of total mortgages that went to second-home buyers also declined in 2023: 2.8% of all mortgage originations were for second homes—down from 3.6% in 2022 and from 5.1% in 2021. 

The lion’s share of mortgages went to buyers of primary homes:

  • 88.6% of mortgages in 2023
  • 87.2% in 2022
  • 89.2% in 2020

Mortgage-rate locks for second homes are down year over year

Since the start of 2024, mortgage-rate locks* for second homes have remained near their eight-year low—down 7.3% from April 2023. 

That’s according to a separate Redfin analysis of data from Optimal Blue—a leading indicator that measures mortgage-rate locks rather than mortgage originations, based on data for a sample of U.S. mortgages rather than all U.S. mortgages. 

Compare that 7.3% figure to a 1.6% annual decline in mortgage-rate locks for primary homes during the same period. 

(*Note: Mortgage-rate locks are an agreement between a homebuyer and a lender that locks in a mortgage rate for a set period of time. About 80% of mortgage-rate locks result in home purchases.)

Profile of the second home buyer in 2023

Based on mortgage data for 2023, the typical second-home buyer is an affluent, white Gen Xer: 

  • High income: 86% of all second home mortgages issued in 2023 went to high-income buyers, with just under 3% going to low-income buyers. (The nationwide median income according to HMDA data is $178,000 for high-income buyers and $65,000 for low-income buyers). 
  • White: 79% of all second home mortgages went to white homebuyers, followed by 6.4% to Asian homebuyers, 6.2% to Hispanic homebuyers, 5.4% to homebuyers identifying as mixed-race, and 2.7% to Black homebuyers. 
  • Gen X: 29.5% of all second-home mortgages issued in 2023 went to 55-64-year-olds and 28.6% went to 45-54-year-olds (Gen Xers were 43 to 58 in 2023). Millennials came next, with 21% of all second home mortgages went to 35-44-year-olds, followed by 11.4% going to 65-74-year-olds, and 6.9% going to homebuyers under 35. 

Metro-level second home mortgage numbers

Metros with the biggest annual declines in second home mortgages:

  1. Austin, TX (down 62.5% year over year)
  2. San Francisco, CA (-57.6%)
  3. New York, NY (-53.9%)
  4. Seattle, WA (-53%)
  5. Nashville, TN (-51.3%)

Metros with the smallest annual declines in second home mortgages:

  1. St. Louis, MO (down 25.5% year over year)
  2. Kansas City, MO (-31.1%)
  3. Providence, RI (-31.1%)
  4. Montgomery County, PA (-32.1%)
  5. Warren, MI (-32.1%)

Looking at metros where second-home mortgages represented the largest share of all mortgage originations, Florida has three of the top five: 

  1. West Palm Beach (just under 7% of all mortgage originations were for second homes)
  2. Orlando, FL (4.1%)
  3. Riverside, CA (4%)
  4. New Brunswick, NJ (3.9%)
  5. Tampa, FL (3.6%)

But while the share of second-home mortgages was highest in these metros, the total number of second-home mortgages was down at least 37% year over year. 

At the other end of the spectrum, second-home mortgages made up the smallest share of total mortgage originations in— 

  1. Detroit, MI (0.5%)
  2. Montgomery County, PA (0.5%)
  3. Oakland, CA (0.5%)
  4. Cleveland, OH (0.6%)
  5. Dallas, TX (0.6%)

Read the full report for more information, including metro-level stats and methodology.