Short-Term Rental Market 2026: Occupancy Is Up and Supply Growth Has Stalled. What the Numbers Mean for Investors

Sixty-five percent. That is the peak-season occupancy rate Destin, Florida hit in July 2025, according to StaySTRA data tracking 53 U.S. short-term rental markets. What made it meaningful was not just the number but what came with it: average daily rates in Destin were running at $538 that month, up nearly 10% from the same period the year before. This was not a market clawing back from a bad year. It was a market pulling ahead.

If you have been watching the STR market from the sidelines for the past twelve to eighteen months, waiting for a clearer signal that the post-pandemic correction had finished running its course, this is the kind of data that shifts the calculus. And as of July 2026, AirDNA has added the macro confirmation to what StaySTRA data has been showing at the market level: their 2026 Short-Term Rental Outlook projects average national occupancy at 57.4%, a figure that pushes above the pre-pandemic benchmark of 57.0% for the first time since the oversupply years of 2023 and 2024.

I have been analyzing markets for over 40 years, and I have seen a lot of “recovery confirmed” headlines arrive well after the recovery was already baked in. This one feels different because the data is precise, not cheerful. Not every market is recovering. A handful are still in correction. The opportunity is in knowing which is which.

The 2026 Macro Picture: What the New STR Outlook Actually Says

AirDNA’s 2026 forecast, released this month, projects that both short-term rental demand and available supply will grow at 2.7% this year. That is a significant deceleration from the 8-12% supply growth rates seen in 2022 and 2023, when a wave of new listings entered the market and compressed occupancy across the board.

Think of supply growth like water pressure in a pipe. During 2022-2024, the pipe was getting wider fast while water volume could not keep up. The result was lower pressure throughout the system, which for STR investors meant lower occupancy rates even in otherwise healthy markets. The 2026 forecast tells us the pipe is no longer widening much. Demand and supply are growing at the same pace. The pressure is stabilizing.

The revenue picture reflects this. RevPAR (revenue per available rental night, the cleanest single metric for STR performance) is forecast to grow 2.9% in 2026. Nightly rates, which grew a tepid 0.7% year-over-year in January 2026, had accelerated to approximately 3% growth by spring. That trajectory matters for underwriting.

There are real headwinds worth noting. International travel to U.S. short-term rentals is down 12% from spring 2025 levels, with Canadian demand specifically dropping 32% from 2024. Mortgage rates pushed back above 6% in 2025 due to renewed inflation pressures, delaying some investment and slowing new listing creation. That is partly behind the supply slowdown and it represents a headwind for acquisition costs and a tailwind for existing operators simultaneously.

Three markets the AirDNA report highlights as RevPAR outperformers year-to-date: San Francisco at +12.1%, Anaheim at +11.0%, and Philadelphia at +10.1%. These are urban markets with constrained supply and strong convention and event demand. If you own or are evaluating an urban STR, those numbers represent a real shift from the urban underperformance of 2021-2023.

What StaySTRA Data Shows: 53 Markets, Peak Season Comparison

Stay with me here, because this next section is where the macro story gets more complicated and more useful for investors making actual decisions.

StaySTRA tracks 53 U.S. markets with month-by-month data going back to 2021. To identify where the recovery is happening versus where it is still pending, I pulled peak-season data comparing July 2025 to July 2024 across all tracked markets. July is the most reliable comparison month for most STR categories because it represents peak demand in nearly every property type: coastal, mountain, urban, lake, and rural alike.

Across 53 markets, average July 2025 occupancy settled at 51.2% and average daily rates came in at $339. On a raw basis, the markets are split. When you look at the directional movement, a clear pattern emerges: markets with moderate or negative supply growth are performing well on both occupancy and ADR simultaneously. Markets where supply grew aggressively are still absorbing that inventory. This is the distinction that matters most for buyers evaluating where to put capital right now.

The Buy-Signal Markets: Where Occupancy and ADR Both Moved Higher

Of the 53 markets StaySTRA tracks, 10 showed clear buy signals in peak season 2025: both occupancy and average daily rates improved year-over-year. These are the markets where the recovery is not just theory. The underlying supply-demand balance has shifted in favor of operators.

Source: StaySTRA data, July 2025 vs. July 2024. Markets with 200 or more active listings included.

A few things stand out in this table. First, the Gulf Coast is running hot. Gulf Shores, Orange Beach, Destin, and Panama City Beach are all showing the same signal: demand is growing faster than supply in that corridor, and operators are capturing both more bookings and higher prices per booking simultaneously. That combination is rare in any market cycle and it is the clearest indicator of a healthy STR investment environment.

Second, Traverse City, Michigan at 73% occupancy is worth highlighting for investors who tend to focus exclusively on coastal or mountain markets. The Great Lakes vacation rental market has been quietly building a durable track record. Traverse City’s RevPAR gain of 17% in peak season reflects a supply base that has not grown recklessly and a demand base anchored in wine tourism, outdoor recreation, and summer families that has been expanding without the volatility of event-driven markets.

Third, Orlando at +29% RevPAR growth may surprise readers who follow the narrative that Florida’s theme park market is permanently oversaturated. The correction happened in 2023 and 2024, when the broader Orlando and Kissimmee area absorbed a significant wave of new listings. Based on StaySTRA data, the market has worked through much of that inventory and is recovering. This is what a completed correction looks like in practice.

Port Aransas, Texas deserves a specific mention. Nine percentage points of occupancy improvement in a single year is a strong signal even for the most data-focused analysts. That market has benefited from Texas residents choosing domestic coastal travel, and from supply growth that was moderate relative to the demand the market attracted. At $519 ADR with 60% peak occupancy, the revenue math is compelling for a Texas coastal acquisition.

The Markets Still Lagging: Where the Oversupply Has Not Cleared

Do not let this list discourage you from looking carefully at these markets. Understanding which areas are still in correction is just as valuable as finding the strong ones. If you are already invested in one of these markets, you have important context. If you are considering a purchase there, you know exactly what questions to ask before committing.

Source: StaySTRA data, July 2025 vs. July 2024.

Las Vegas is the most striking case. Supply grew 66% year-over-year in July 2025 compared to July 2024. That is not a market adjusting at the margins. That is a market still absorbing a large supply wave. RevPAR is down 1% and occupancy slipped two percentage points. The correction there is ongoing, and until supply growth normalizes significantly, competition among hosts will keep a lid on rates and bookings for existing operators and make acquisition underwriting difficult for new buyers.

The Texas markets (Dallas, Houston, Temple) share a similar story: aggressive supply expansion in 2023-2024 is still working its way through the system. These are not structurally bad cities for short-term rentals, but the math for new acquisitions is harder when you are competing against 34 to 44 percent more listings than existed a year prior. Existing operators who purchased before the supply wave have the context to evaluate their position. Buyers entering now should stress-test occupancy assumptions against current competitive density rather than historical figures.

Asheville is the most interesting case on this list because its supply actually contracted slightly (down 2% year-over-year). The occupancy and RevPAR decline there appears to reflect demand softness rather than a supply glut. Asheville faced specific headwinds including recovery disruption from severe weather events and a regulatory environment that has kept some operators cautious. The supply story alone does not explain the weakness. I would watch that market carefully before committing capital and look for the demand-side signals to stabilize before acting.

The Supply Story: What a 2.7% Growth Rate Actually Represents

One of the most significant data points in the 2026 outlook is the national supply growth forecast at 2.7%. To understand why this matters, you have to see it against where supply growth was during the cycle that preceded it.

In 2022 and 2023, short-term rental supply grew at 8 to 12 percent nationally. New listings flooded the platforms. Investors who had watched occupancy rates hit 70-80% during the 2020-2021 demand surge poured capital into STR properties. The result was that demand, while still growing, could not absorb the new supply fast enough. Occupancy rates compressed. Prices stalled. The negative STR market coverage of 2023 and 2024 reflected what was genuinely happening at the macro level.

At 2.7%, national supply growth has effectively returned to a pace that demand can absorb. The mechanism behind slowing supply growth is partly the same headwind that makes new acquisitions harder right now: mortgage rates above 6% delayed the next wave of STR investment. Properties that would have been purchased and listed in 2024 and 2025 simply were not. That delayed investment is the tailwind existing operators are benefiting from today.

The nuance is that this national average masks enormous variation at the market level, as the laggard table above demonstrates clearly. Las Vegas saw 66% supply growth year-over-year even as the national average decelerated. For investors looking at specific markets, checking current listing counts against historical norms before acquiring is essential. The StaySTRA Analyzer pulls this data for any U.S. market so you are not relying on a national headline to make a local investment decision.

Booking Windows Are Compressing: A Leading Indicator Worth Watching

One underappreciated shift in the 2026 STR market is what is happening to booking lead times. Data cited in the AirDNA outlook shows July peak booking windows tightening from 34 days in prior years to 29 days in 2026. That is a five-day compression in advance booking behavior during the most competitive season of the year.

Think of a booking window the way you might think about a restaurant reservation. When a restaurant is hard to get into, diners call weeks in advance. When tables are always available, they call the day of. The shift toward shorter booking windows in recovering markets suggests the balance of power is tilting back toward hosts. Guests who know supply is constrained book sooner to lock in the properties they want. The compressing window is a leading indicator of tightening supply, not a lagging one.

For operators, the practical implication is that dynamic pricing tools need to be calibrated for this tighter window. If your pricing was set based on 2023 or 2024 patterns, when guests booked further out, your algorithm may be undercharging in the final two weeks before a stay. In recovering markets, that is where more of the revenue opportunity now lives.

Shorter average trip durations are also part of the 2026 pattern. Guests are taking more frequent, shorter stays rather than extended trips. Hosts with strict minimum-stay policies may want to revisit those settings. A four-night minimum that made sense when week-long bookings were common may be creating calendar gaps in a market where weekend demand has become the primary booking pattern.

Running the DSCR Numbers: Which Markets Support the Math in 2026

For investors evaluating acquisitions with DSCR loans, the relevant question is not only which markets are recovering but which ones produce enough gross rental income to carry debt service at current rates. With DSCR mortgage products holding above 6%, the bar for positive cash flow on a new acquisition is meaningfully higher than it was in 2020 and 2021.

The markets from the buy-signal table that tend to support DSCR underwriting share a few characteristics: average daily rates above $350, peak-season occupancy above 55%, and demand patterns that are not entirely dependent on a single event or a narrow season window. From the StaySTRA data, the markets checking all three boxes most consistently in July 2025 are Gulf Shores, Destin, Port Aransas, Traverse City, and Jacksonville Beach.

Key West and Orange Beach have the ADR strength but carry higher acquisition costs relative to those markets, which affects the DSCR calculation even when occupancy and rate performance are strong. For a ranked view of where the fundamentals are strongest right now, the StaySTRA best markets analysis compares markets on the metrics that matter most to DSCR lenders. And the historical occupancy pattern at our Airbnb occupancy by city page gives you the full seasonal picture before you finalize underwriting assumptions.

Markets with high ADR but peak-season occupancy below 45% require conservative modeling. The revenue is there when guests book, but the occupancy variability creates cash flow projections that are harder to defend at a 1.2x coverage ratio. Know the seasonal pattern before you commit to a purchase price.

The Bottom Line

I keep a piece of Pueblo pottery on my desk here in Santa Fe that has been there since I left government statistical work to go independent. I set it there as a reminder that meaningful patterns take time to emerge from data, and that patience is almost always rewarded when you wait for the evidence to catch up with the hypothesis.

The 2026 STR market looks like one of those moments. The data is not pointing uniformly in one direction. It never does. Las Vegas is not where Destin is. Asheville is not where Gulf Shores is. But the direction of the national trend is clearer now than it has been since before the pandemic: occupancy back above pre-pandemic levels, supply growth slowing to an absorbable pace, RevPAR accelerating. Those three data points together are what investors sitting on the sidelines have been waiting to see.

The markets that are performing now earned their recovery through three years of a genuinely difficult market cycle. They absorbed the supply surge, retained their demand base, and came out the other side with stronger occupancy and better pricing power. That is a more durable foundation than what existed in 2021. And it is the signal worth acting on.

We do our best to keep our data accurate and up to date, but markets move fast and we are only human. Always verify current figures directly with local sources before making investment decisions.