Vacation Home Sales Plummeted in 2007

Washington, DC, March 28, 2008--Sales of vacation homes declined last year, the National Association of Realtors said Friday.

Vacation-home sales fell 30.6 percent to 740,000 in 2007, from 1.07 million in 2006, according to the group's annual Investment and Vacation Home Buyers Survey.

Speculators also laid low. Homes bought strictly for investment dropped 18.1 percent to 1.35 million last year, compared with 1.65 million in 2006.

The dropoff is far more than sales of primary residences, which fell 10% to 4.34 million in 2007 from 4.82 million in 2006. Sales of vacation- and investment-home sales accounted for 33 percent of all home sales last year, down from a 36 percent share in 2006, the group said.

"Second homes are discretionary purchases and there is a natural tendency to pull back from big-ticket items in periods of uncertainty," said NAR Chief Economist Lawrence Yun said.

"The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007. Some buyers simply adopted a wait-and-see attitude."

Those who did buy vacation homes in 2007 paid less than in 2006. The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 in 2006, NAR said.