In markets like Hilton Head Island, South Carolina, or Lake Havasu City, Arizona, sales have all but dried up, data from mortgage services firm Optimal Blue showed, even though demand remains as hot as ever.
The market for second homes is dominated by wealthier buyers less sensitive to the jump in interest rates and the persistence of high home prices, but inventory remains a barrier. "When quality secondary homes come on the market and they’re prepared and presented correctly, they go quite quickly regardless of the price point,” Tuttle said.
Higher borrowing costs and lower vacation home sales have also hurt some businesses that count on that activity to feed their own operations, said Tuttle, citing difficulties for realtors and home remodeling contractors.