The U.S. short-term rental market has experienced remarkable growth, particularly in coastal areas, as travelers continue to seek out convenient and flexible vacation options. July 2025 marked a historic milestone for the sector, with a record 26.4 million nights booked, which represents a 3.6% increase over the same period in 2024. This surge in bookings comes despite economic challenges such as rising inflation and increased nightly rates, which have climbed to an average of $351. Even with these rising costs, the demand for short-term rentals has remained robust, highlighting a shift in consumer behavior and preferences.
One of the most notable trends has been the growing demand for larger properties. Larger homes, particularly those with six or more bedrooms, have seen a remarkable 13-fold increase in bookings compared to single-bedroom units. This change in preferences points to the growing trend of family and group travel, with many looking for more spacious accommodations that provide greater comfort and privacy. The increasing popularity of multi-bedroom properties also reflects the ongoing shift in travel habits since the pandemic, as more people are choosing to travel together in a more communal and family-focused environment.
Coastal markets, such as Maui, Hilton Head Island, and Charleston, have seen some of the most significant increases in revenue per available rental (RevPAR), with Maui experiencing a notable 17.3% year-over-year growth. This surge in revenue is largely attributed to domestic travelers stepping in to fill the gap left by a drop in international tourism, particularly from Canada. Geopolitical tensions and changing trade policies have affected international travel, leading to fewer Canadian visitors to the U.S. In their place, however, domestic travelers have flooded coastal destinations, eager to take advantage of short-term rental options that offer both affordability and comfort. These travelers are particularly attracted to the flexibility that short-term rentals provide, allowing them to live like locals in a variety of different settings.
The increasing demand for short-term rentals has led industry experts to see the sector as a promising investment opportunity, particularly for investors looking to capitalize on the ongoing demand for vacation homes. As the market for short-term rentals continues to expand, there is growing interest in purchasing properties that can be marketed to travelers seeking flexible, personalized lodging. Many experts believe that if interest rates were to decrease, the short-term rental market would likely experience even greater growth, attracting even more investors and homeowners interested in turning their properties into rental units.
However, the rapid expansion of the short-term rental market has not come without its challenges. Local governments in some areas are beginning to consider implementing regulations that could restrict the growth of the sector. In Maui, for example, there are ongoing discussions about introducing restrictions on short-term rentals, particularly in multifamily zones. Such regulatory changes could slow down the growth of short-term rentals in certain regions, as property owners may be forced to comply with stricter rules or even lose their ability to rent out their properties to vacationers. These potential regulatory hurdles have raised concerns among industry stakeholders who fear that restrictions could impact profitability and availability in some of the most sought-after coastal destinations.
Despite these potential challenges, the short-term rental market remains resilient, driven by a combination of consumer demand, the growing appeal of coastal destinations, and the flexibility that vacation rentals provide. As travelers continue to seek out alternative accommodations that offer more space, privacy, and comfort compared to traditional hotels, short-term rentals are likely to remain a key component of the travel industry. Coastal markets, in particular, stand to benefit from this ongoing trend, as the demand for vacation properties continues to rise.
Looking ahead, the future of the short-term rental market appears promising, though it will be important to monitor potential regulatory changes that could alter the landscape. For now, the combination of high demand, rising interest in larger properties, and the appeal of coastal destinations continues to drive the growth of the sector. As travelers increasingly prioritize flexibility and unique lodging experiences, short-term rentals will continue to play a key role in shaping the future of vacation travel. For both travelers and investors, the opportunities in the short-term rental market are clear—especially in popular coastal regions that are seeing the most significant growth.
