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Vacation Home Sellers Have Cut Prices to Sell

Higher mortgage rates and softer demand for short-term rentals are pushing owners of second homes to reduce their asking prices.

Updated on Sept. 30, 2026 in Residential

Gouache-painted illustration of a halved wooden vacation cabin on a tilted plinth, representing cooling demand in the real estate market.
Vacation home owners across the United States are increasingly cutting listing prices as high mortgage rates and softening rental demand weaken the market. AI Illustration. Upload story photo >

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Across the United States, owners of vacation properties are increasingly slashing listing prices as market inventory grows and demand from potential buyers stalls. The shift follows a period of rapid growth for short-term rentals, which peaked with nearly 1.5 million listings in 2023.

Why it matters

Rising mortgage rates, which have pushed past 7%, combined with plateauing rental demand, have strained the profitability of second homes for many investors. Many owners are now looking to exit their properties to avoid mounting maintenance costs and declining rental revenue.

As of June 2026, 37.3% of vacation homes across the U.S. saw price cuts, a significant shift in a market that saw mortgage applications jump 30% in 2020. In specific hubs like Big Bear Lake, California, prices are now down 20% from their June 2022 peak.

The players

Parcl Labs

A real estate data analytics firm that tracks property listing trends and pricing statistics for the residential market.

The details

Investors are struggling with a 10% rule, where expected annual rental revenue should cover 10% of the purchase price to justify the investment. With rental growth cooling and inventory rising by 1.7% year-over-year as of August 2026, many owners are forced to relist properties with multiple price cuts to attract buyers. This follows a period where home values in markets like Gatlinburg, Tennessee, more than doubled between 2020 and 2022.

Timeline

  1. 2019 served as the baseline for home value comparisons.

  2. 2020 saw a 30% increase in vacation home mortgage applications.

  3. 2023 marked a high point with nearly 1.5 million short-term rental listings.

  4. June 2026 was the period when Parcl Labs recorded widespread price cuts.

  5. August 2026 saw short-term rental listings grow by 1.7% year-over-year.

Money Landscape

The current correction marks a departure from the intense buyer interest that characterized the post-2020 vacation home boom. This shift underscores a broader cycle where high financing costs and market saturation are tempering demand for discretionary residential assets.

Potential buyers may find increased negotiation leverage in markets that saw significant inventory spikes, while current owners should reassess whether their property meets the 10% annual revenue rule. Consult a qualified financial advisor to determine if selling a secondary property aligns with your long-term budget goals.

The takeaway

The era of easy profitability for vacation rentals is cooling, prompting many owners to reconsider their investment portfolios. Review your current property maintenance costs and local rental occupancy rates to determine if your second home still serves your household financial objectives.

Further reading

For more on the current housing climate, explore the Residential section.

Source note: This article includes information reported by Business Insider.

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Is now a good time to purchase a vacation property for short-term rental income?