Dive Brief:
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Vacation-home sales declined for the second-straight year in 2016, dropping 21.6% from 2015 to 721,000 last year, following the most recent peak of 1.3 million in 2014, according to the National Association of Realtors' Investment and Vacation Home Buyers Survey, which tracks new and existing properties.
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Meanwhile, investment-home sales increased 4.5% from 2015 to 1.14 million in 2016.
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The median vacation-home price rose 4.2% from 2015 to $200,000 in 2016, matching the 2006 high. The median investment-home price increased 8% from 2015 to $155,000 in 2016, the highest since 2005 ($183,500).
Dive Insight:
The drop-off in vacation home sales can be credited to the same headwinds facing the housing market overall — rising home prices, insufficient inventory and supply-side challenges including labor availability and material costs. The South and West regions, in particular, are especially feeling the squeeze due to their popularity with vacation- and investment-property buyers, NAR Chief Economist Lawrence Yun said in a statement.
Yun also pegged some lost ground on uncertainty surrounding the 2016 presidential election and its effect on the stability of the stock market.
While many in the construction industry have welcomed the Trump administration, consumers who were planning to buy a vacation home and had money in stocks held off on the purchase leading up to and following the election.
Builder confidence is on the upswing, however, with the latest National Association of Home Builders/Wells Fargo Housing Market Index reaching its highest level since June 2005 in March. Rising material and labor costs persist, but an uptick in housing starts and year-over-year growth in residential permitting activity has builders hopeful that they’ll be able to make a bigger dent in the demand pipeline in the months ahead.
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