Parallels not reclaiming space from macOS guest on macOS host

Host: M4 Mac host running macOS 26.4 Tahoe (new install).
Parallels Desktop: v26.3.0
Guest: macOS Tahoe 26.4 (created via Parallels macOS download)

I have a newly installed Mac M4 Host, new install of Parallels 26.3, and created a new Guest VM of macOS 26.4 via the Parallels menu. The resulting VM was about 30 GB. A few days later, I did a software update to macOS 26.4.1 in the Guest VM, and the VM disk now takes up 137 GB on the Host's disk.

Parallels Control Center shows the VM as only using 30 GB. and the macOS VM itself shows it is only using 20-30 GB. I have no snap shots, and, I have the option set to automatically reclaim space when quiting. I would like to reclaim the unused space on my Host Mac, but I can't find a way to do so.