Vacation home sales in the U.S. tumbled 31 percent last year and real estate bought for speculation dropped 18 percent as mortgage lenders tightened standards, the National Association of Realtors said.

Sales dropped to 740,000 from a record 1.07 million in 2006, the Chicago-based Realtors said in a report. Sales of investment properties, which typically are resold without the buyers ever living in them, fell to 1.35 million from 1.65 million a year earlier.

Even as Baby Boomers, the 76 million Americans born between 1946 and 1964, approach their peak earning years they are holding back on purchasing a vacation home as the U.S. real estate slump enters its third year. About 55 percent of U.S. banks tightened underwriting standards on prime mortgages in 2007's fourth quarter, according to the Federal Reserve Senior Loan Officer Survey, published in January.

"Some buyers simply adopted a wait-and-see attitude," Lawrence Yun, the Realtor's chief economist, said in the report.

The median price of a vacation home was $195,000 in 2007, down 2.5 percent from $200,000 a year earlier, the report said. The price of an investment property was $150,000, unchanged from 2006.

Banks trying to rebuild their balance sheets are raising borrowing costs for nearly all would-be home buyers, particularly those who are looking for second properties.

"Second homes are discretionary purchases, and there is a natural tendency to pull back from big-ticket items in periods of uncertainty," Mr. Yun said. "The other factor is the disruption in the mortgage market, with a significant tightening of credit during the second half of 2007."

In East Hampton, Long Island, among the most sought after summertime resorts for wealthy Manhattanites, prices dropped more than 10 percent in the first two months of this year to a median of $985,000 compared with $1.1 million last year, according to Suffolk Research Service Inc., a real estate data company.

"The market is really hurting out here," company President George Simpson said in an interview. "In the last three of four months prices have been going down at a somewhat steep pace."

Singer-songwriter and Grammy-award winner Billy Joel has had his mansion in Oyster Bay, Long Island, on the market for more than a year. The 14,000 square-foot house was put up for sale for $37.5 million in October of 2006, according to the Wall Street Journal.

Celebrity broker Dolly Lenz of Manhattan-based Prudential Douglas Elliman Real Estate took over the listing earlier this month and plans to market it for $32.5 million, she said.

"It is probably the most magnificent house I have ever seen," she said.

Nationwide sales of existing homes have fallen from a peak pace of 7.08 million in 2005 to 5.65 million last year, according to Fannie Mae, the largest U.S. mortgage buyer. The median price has been falling since June, hitting $195,900 in February, down from $229,000. Last year was the first annual decline in prices since the Great Depression, according to the Realtors group.

New foreclosures in the U.S. rose to an all-time high in the fourth quarter as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said in a March 6 report. Those defaults have prompted more than $200 billion in writedowns among Wall Street firms and other financial institutions that packaged mortgages into securities for resale to investors.

Last year's typical vacation-home buyer was 46 years old with a median household income of $99,100, according to NAR. About 65 percent of vacation buyers and 71 percent of investment buyers bought existing homes, while the remainder purchased newly built units.

The median distance vacationer's traveled to their second property was 287 miles from their primary residence.

Mark Muller, a real estate broker on Captiva Island off the coast of Fort Myers, Florida, said sales have been slow this year in the community where he estimates 90 percent of the homes are vacation properties.

"I have been busy in terms of traffic but not sales," he said. "There's people out there with money, but they're waiting for the bottom."