U.S. 2025 Mid-Year Short-Term Rental Outlook Report

The 2025 Mid-Year Outlook Report for the short-term rental (STR) market presents a comprehensive analysis of the industry's performance and future expectations, based on the trends of 2024 and the first half of 2025. Here's a summary of the key points: 

Sustained growth, softened momentum: After a strong rebound in 2024, demand growth continued into early 2025, though at a more moderate pace. STR performance remained healthy, with national occupancy climbing back above the pre-pandemic average.

ADR rebounds with less volatility: Average daily rates (ADR) saw continued growth after stagnating in 2023. The gap between ADR and the AirDNA Repeat Rent Index (RRI) narrowed as the impact of new listings on host pricing power diminished.

Booking behavior shifts: Booking lead times have shortened significantly across all market types. A shift toward last-minute booking is complicating demand forecasting and depressing forward-looking pacing data, even as actual occupancy trends remain positive.

Steady progress toward full recovery: Occupancy is projected to increase gradually through 2026, supported by healthy job and income growth, improving affordability, and relatively balanced supply and demand dynamics.

Market maturity and divergence: Growth rates are converging across market types. While Small City/Rural and Mid-Size City markets remain growth leaders, Large City Urban and Suburban markets are regaining momentum after regulatory and affordability-related slowdowns.

Moderate inflation risks ahead: Recent tariffs and geopolitical instability are expected to create a one-time inflation spike in the second half of 2025, with a milder effect on ADR growth than in previous inflation cycles.

Policy shifts add uncertainty: Dramatic trade policy changes under the Trump administration introduced new volatility into inflation and interest rate forecasts. Oxford Economics assigns only a 40% likelihood to the baseline scenario, underscoring elevated macroeconomic uncertainty.

Strong starting point limits growth potential: Despite policy risks, the U.S. economy began 2025 in excellent shape with low unemployment, solid GDP growth, and improving inflation trends. This cushions downside risk but limits how much stronger conditions can get.

Supply is set to reaccelerate: Falling interest rates are expected to revive STR supply growth in late 2025 and into 2026, especially in Suburban and Urban markets. However, the transmission of lower rates to mortgage markets and STR listings comes with a lag.

Performance dispersion widens: Domestic leisure markets, especially Coastal and Mountain/Lake destinations, are benefiting from a weaker dollar and continued consumer appetite for travel. International travel is softening slightly, driven largely by political friction with Canada.

At the end of 2024, our predictions for 2025 and beyond were that the U.S. short-term rental (STR) market would continue balancing supply and demand, creating a slow, gradual increase in occupancy and muted but positive gains in average daily rates (ADR). AirDNA’s updated forecasts are summarized in the table below and then broken down in more detail throughout this report .

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One of the key issues affecting short-term rentals is the relatively chilly housing market that has gripped the U.S. in recent years. Over the past two years, the Federal Reserve has implemented a series of aggressive interest rate hikes in an effort to combat inflation. As a result, mortgage rates climbed sharply. Monthly mortgage payments doubled or even tripled compared to the historically low rates seen in the years immediately following the pandemic.

These interest rate hikes proved largely effective at cooling inflation, though lingering inflation in 2023 remained high enough to dampen demand. At the same time, rising costs didn’t translate to stronger pricing power for hosts. In fact, average daily rates (ADR) stagnated, and a “mix shift”—where the composition of STRs changed toward smaller or more budget-friendly properties—actually pulled average prices down.

As inflation began to cool, ADR growth resumed in 2024 and accelerated further into the first half of 2025.

Inflation pressures could return. Oxford Economics has revised its outlook following faster-than-expected policy changes under the newly re-elected Trump administration. Tariffs that were originally expected in 2026 were instead implemented immediately and at steeper levels. While this is expected to create a one-time inflation spike, it may also raise long-term inflation expectations, especially if workers push for higher wages to match rising costs.

Oil prices, which had previously helped keep inflation in check, are also becoming a source of concern. Recent volatility driven by geopolitical tensions in the Middle East could add to inflationary pressure in the months ahead.

This has shifted expected inflation increases forward to the second half of 2025. The accelerated inflation timeframe may cause the Federal Reserve to delay cutting interest rates. The Fed’s dual mandate is to keep inflation low and consistent, with a target of 2%, while maintaining strong employment. With unemployment holding steady between 4.0% and 4.2% over the past year, the Fed has room to stay focused on controlling both the current and projected inflation tied to recent policy changes.

Nevertheless, there’s considerable uncertainty around how inflation will evolve. To prepare for a range of possible outcomes, Oxford Economics created multiple narrative scenarios based on varying policy decisions and global reactions. These include:

Two upside scenarios: government-led economic upturn and a best-case trade war.

Two downside scenarios: worst-case trade war and a broader market correction. 

The most-likely baseline scenario is given a 40% probability, much lower than the usual 60-70%. This reflects Oxford’s belief that U.S. policy direction is unusually uncertain heading into the second half of 2025.

In discussing future economic developments, it’s important to keep in mind that the U.S. entered 2025 on exceptionally firm footing. Unemployment remained low and stable, GDP growth was solid, and inflation was steadily moving toward the Fed’s 2% target. 

Even with the added strain of new tariffs, inflation under the baseline scenario is expected to peak at just 3.4% in Q2 2026, well below the 9.0% high seen in June 2022. Only in the worst-case trade war scenario does inflation achieve meaningfully higher levels, topping out at just under 6%.

Diverging outcomes for interest rates, jobs, and income 

While most scenarios show inflation staying within a relatively narrow range, interest rate outcomes vary widely depending on how the economy evolves. In the worst-case trade war scenario, inflation rises sharply in part because interest rates are cut quickly and deeply. Low rates can fuel inflation, but in this scenario, stimulating the labor market and economic growth takes priority in the short-term over controlling inflation.


Similarly, the future paths of unemployment and income are generally benign. In the baseline scenario, unemployment stays below 4.5%. The worst-case trade war scenario sees it peak just above 6%, which is somewhat elevated but historically not an especially high figure. 


Real personal disposable income continues to grow in all but the worst-case trade war, where it dips below -1% in early 2026. In all other scenarios, the combination of a strong job market and rising incomes will support consumer spending, including for leisure trips.

Home price growth is expected to slow across most scenarios, dipping below 4% annually. The exception is the worst-case trade war scenario, where rapid interest rate cuts and a shift toward domestic spending drive up housing demand and prices in late 2025. In most cases, however, the combination of cooling prices and lower rates will support a rebound in STR supply growth in 2026.

In early March, the Trump administration announced a sweeping new set of tariffs. Referred to as the “Liberation Day” tariffs, they were framed as a major shift toward economic nationalism and protectionism. The aggressive tone of the announcement raised concerns that it could deter international travelers. At the time, the most recent data from March showed international short-term rental (STR) stays were already down 9.2% year-over-year (YOY). This added to worries about a potential decline in global tourism to the U.S.

The March dip in international stays and the tariff announcement may have been more coincidental than connected. A calendar shift that moved Easter and many spring breaks from March into April likely played a larger role in the reduced travel. International stays rebounded sharply in April with 12.8% YOY growth.

When the calendar normalized and the tariffs were in full effect in May, international stays declined 4.6% YOY. AirDNA’s current view is that international travel is shifting from a modest tailwind to a slight headwind for STR demand. Still, with international guests making up only about 9% of U.S. STR bookings, the change will be difficult to notice in aggregate.

Much of May’s international travel decline was due to a consistent drop in visitors from Canada, where national backlash followed Trump’s comments suggesting the U.S. should annex Canada as the 51st state. Canadian demand has continued to fall through May, which may impact border markets and destinations with high Canadian visitation, like Fort Lauderdale, Florida. Statistics Canada reported that air travel to the U.S. was down 24% year-over-year in May, with land crossings down 35%. AirDNA’s own data supports this, showing a 28.1% drop in guest reviews from Canadian travelers in May.

While overall international visitation softened, the decline appears to be driven by Canada and a few other specific countries. AirDNA compared demand from March through May of 2025 to the same period in 2024 and found that many significant economies actually increased visitation year-over-year. Those countries include:

The United States saw a year-over-year decline in demand from:

These mixed trends make it difficult to generalize international demand patterns.

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Forward-looking demand and occupancy—also known as pacing data—tracks current reservations on the books compared to the same point in time one year earlier. This data is a key input in AirDNA’s near-term forecasts.

While long-term demand trends are shaped by broader economic factors like income and employment, short-term demand (within the next three months) can be influenced by more unpredictable forces. These include shifting traveler preferences or the confluence of local events. In these cases, pacing data helps bridge the gap between economic theory and what’s actually happening on the ground.

Interpreting and correctly using pacing data comes with some challenges, since traveler booking behavior can shift over time. For example, summer occupancy pacing in the U.S. is currently down about 4% year-over-year, and September is pacing even lower at -7.7% YOY. However, this doesn’t mean overall occupancy will decline. In fact, AirDNA expects occupancy to gradually increase. 

The dip in pacing is mostly due to two factors. First, many listings have opened their calendars earlier this year, increasing the number of available nights compared to last year. Second, travelers are booking closer to their stay dates, shortening booking lead times.

When looking at reservation lead times, booking behavior has clearly shifted. Travelers are increasingly waiting until the last minute to book. In August 2023, just 16% of U.S. reservations were made within five days of check-in. By January 2025, that share had nearly doubled to 31%, and sits at 24% in May. 


Meanwhile, the share of bookings made well in advance—both in the middle and long lead time categories—has declined, indicating a broader trend toward shorter planning windows.


Shortening lead times is widespread in the U.S., perhaps as a result of growing consumer comfort with booking short-term rentals and rising economic and policy uncertainty. Every location type has seen a decline in median lead time over the past 12 months, though the extent varies. Urban markets experienced the sharpest drop at -8.4% year-over-year, while Coastal Resort markets saw a more modest decline of -3.5% YOY.

Short lead times make demand forecasting difficult, since information about bookings is withheld for longer. This also means that pacing comparisons to the previous year can understate actual demand and occupancy, since more bookings are still to come.

Short-Term Rental Market Forecasts Through 2026

2024 experienced a rebound in demand growth from a relatively slower 2023 that was hampered by high inflation and recession concerns. In 2025, that growth has moderated slightly, settling into a more sustainable, long-term trend that AirDNA expects to continue into 2026. However, not all markets are following the same trajectory.

AirDNA segments markets into six types based on factors like geography, population size, and population density:

Large City Urban markets are central city cores in major metropolitan areas. They represent the 50 cities with the largest population count, according to the Metropolitan Statistical Analysis in the U.S.

Large City Suburban markets are the surrounding suburban neighborhoods within those large metro areas, differentiated from the urban core by population density.

Mid-Size City markets represent the next 100 locations according to population density that aren’t already included in the Coastal and Mountain Lake market types.

Small City/Rural markets encompass all other areas in the country that aren’t included in the Coastal and Mountain Lake market types.

The Coastal and Mountain/Lake market types are considered part of a larger destination/resort category. This category represents locations that primarily attract leisure travelers. In many of these markets, short-term rentals serve as the primary form of lodging. 

Coastal and Mountain/Lake markets are expected to see either constant or slightly increasing demand in 2025, fueled by resilient leisure travel and consumer spending. As newly implemented tariffs gradually increase inflation, demand growth in these markets may ease slightly by 2026.

In contrast, Large City Urban markets have faced demand constraints due to stricter regulations. This was most notable in New York City, where short-term rentals were effectively banned at the end of 2023. This created a one-time shock to supply, significantly reducing available listings in 2024. With the impact of that regulation now absorbed, supply is beginning to grow again and is expected to accelerate through 2026. Demand is projected to recover in tandem, rising 2.1% year-over-year in 2025 and 3.0% in 2026.

Large City Suburban markets, which saw rapid supply growth in 2023, slowed precipitously in 2024 and the first half of 2025. This slowdown was in response to high interest rates and surging home prices. Suburban supply growth will recover as mortgage rates begin to fall later in 2025. As a result, 2025 will likely mark the low point for both supply and demand growth in suburban areas. This comes about a year behind the recovery seen in major urban markets.

Mid-Sized Cities and Small City/Rural Markets

Meanwhile, Mid-Size Cities and Small City/Rural markets have experienced the fastest growth in both supply and demand over the past few years. These markets are beginning to mature, and declining interest rates are reducing the relative affordability that once made them especially attractive. As a result, growth is moderating and demand growth in both market types is projected to converge at 7.8% in 2026. 

Small City/Rural markets will continue to outpace Mid-Size Cities in supply growth, with 7.2% year-over-year growth compared to 5.1% YOY for Mid-Size Cities and 5.2% YOY for Large City Suburban areas.

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As of April 2025, trailing twelve-month (TTM) occupancy surpassed the pre-COVID average of 55.4% for the first time since 2023. While falling interest rates are expected to modestly accelerate supply growth later in the year, there are several delays in how those rate cuts affect the STR market. It takes time for Federal Reserve decisions to influence mortgage rates, for investors to act on those changes, and for new listings to come online. Thanks to this lag, occupancy is expected to keep rising slowly but steadily through 2026.

High inflation appeared to hold back pricing power for hosts. Average daily rate (ADR) growth plunged in mid-2022 and remained negative through much of 2023. However, the AirDNA Repeat Rent Index (RRI) held steady around 0% growth. RRI tracks price changes for the same listings over time, removing the effect of new or different types of listings. We call this effect “mix shift.” Zero RRI growth suggests that existing listings maintained their pricing. The average ADR declined because many new properties entered the market at lower price points than the 2023 market average.

This trend flipped in 2024. ADR growth began to outpace RRI growth, indicating that new listings were entering the market at higher price points than existing ones. Now that the gap between ADR and RRI has narrowed, the two metrics are expected to stay more closely aligned going forward. New listings are now better matched in size and quality to existing short-term rentals, and slower supply growth reduces the impact of mix shift. Put another way, fewer new listings entering the market will exert less influence on overall average pricing.

Both ADR and RRI growth are expected to slow slightly in response to the new wave of inflation driven by one-time tariff-related price increases. However, the baseline inflation is forecast to stay well below the peaks seen in 2022 and 2023, so the impact on pricing will likely be modest. There’s also room for rate growth to pick back up in 2027, depending on the fiscal effects of the administration’s latest tax policy bill.

Looking at the top 50 markets, ADR growth is clearly slowing compared to previous years. However, outright declines are expected in only a few locations. Some of the strongest projected ADR increases for 2025, like San Francisco (+13.3%) and Breckenridge (+10.9%), are in markets where new regulations or stricter enforcement have limited supply growth. In these cases, reduced competition allows existing operators to benefit from higher occupancy and stronger pricing power.

New Orleans experienced high ADR growth (+12.8%) thanks to hosting the Super Bowl. Shortly after the event, the city enacted new restrictions that are expected to slow listing growth from +7.1% year-over-year in 2025 to just +0.5% in 2026. With supply constrained, existing operators will be able to raise nightly rates by +4.2%. This is strong year-over-year growth, considering that 2025 was a Super Bowl year.

Occupancy in the top 50 markets is expected to rise in 2025, but performance will diverge in 2026. On average, occupancy across these markets will remain relatively flat (+0.2%), as gains in some areas are offset by declines in others. Notably, urban markets are heavily represented in the top 50 and are forecasted to see a -1.1% drop due to surging supply growth.

The top markets for occupancy growth in 2025 are dominated by Coastal destinations:

The weakening dollar, policy uncertainty, and low fuel prices seem to be powering domestic summer leisure markets in the U.S.

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Navigating Uncertainty: Scenarios and Implications

AirDNA used Oxford Economics’ scenarios to explore the potential range of STR performance outcomes. It’s important to remember that the U.S. economy started 2025 in a strong position: inflation was below 3%, unemployment held steady at 4.2%, and real GDP growth reached 2.8%, according to the Bureau of Economic Analysis. This gives the travel outlook considerable resilience, but it also limits how much stronger the economy can get. Put simply, when the economy is already near full capacity, there's less room for upside surprises.

Because the economy is already strong, even the two upside scenarios offer limited room for additional demand growth. AirDNA’s economic model suggests these scenarios could lift demand growth by up to a percentage point for the remainder of the year, from about 5-5.5% to a little above 6%.

On the flip side, the market correction downside scenario would lower demand growth by a similar amount. The key difference is longevity: while the boost from upside scenarios fades in 2026, the negative effects of the market correction are expected to persist and even worsen next year.

The worst case trade war scenario reduces demand by about another point in 2025 and by two points in 2026. Even in the worst case scenario, demand growth is only briefly negative in January 2026. This is largely due to tough comparisons against exceptionally strong performance in January 2025.

Supply growth projections vary less than demand across economic scenarios. In challenging conditions, the Fed is expected to cut rates more quickly. This would normally increase supply by improving housing affordability. However, economic uncertainty may also dampen investment. These opposing forces tend to cancel each other out, limiting the overall impact. As a result, the upside scenarios have little effect on supply growth, while downside scenarios reduce 2026 supply growth modestly, from 5.3% in the baseline scenario to around 4.3% year-over-year.

The 2025 Mid-Year Outlook Report for the short-term rental (STR) market presents a comprehensive analysis of the industry's performance and future expectations, based on the trends of the first half of 2025.

AirDNA: 2025 Mid-Year Outlook Report

Here's what you need to know about the U.S. short-term rental industry in the coming year.

AirDNA 2025 Outlook Report

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U.S. 2025 Mid-Year Short-Term Rental Outlook Report

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