The average Class B units finished August leasing for $ 1,430 per month for new residents – about $ 315 more than 24 months ago .
Class C
Despite absorption declines of around 90 % in the top two price classes , the situation in the remaining two tiers has been even more dire . A net loss of about 1,100 leased units in the Class C segment represented a major underperformance relative to the recent past . The lowest net absorption total of the last five years had been a net gain of a little more than 700 units through August of 2020 . This year the total was 1,800 net units lower than that previous low point .
The average occupancy loss was double that from the Class B group with a 1.6 % decline bringing the average to just below 94 % to close the period . Here too , with the exception of last year , average occupancy finished the month higher than in any recent year .
Interestingly , the Class C tier has not mirrored the previous two groups in terms of rent growth moderation despite a worse demand situation . This likely is at least in part due to average occupancy remaining above that from the recent pre-pandemic past . An 8 % gain through August was lower than last year ’ s 10 % increase , but the 50 % decline in growth as with Class A and Class B did not materialize .
The average Class C units ended August leasing for $ 1,215 per month for new residents – an increase of about $ 240 per month from 24 months ago .
Class D
Class D has been perhaps the oddest group of the four price tiers this year . Net absorption also fell dramatically as with the other groups . A net loss of around 1,000 leased units was the first time in negative territory for Class D at this point in the year in the last five years and represented a 2,100 net unit swing from last year ’ s positive demand .
Average occupancy plummeted 2.8 % in the period to end August just above 91 %. Unlike the other three price classes which still have some remaining cushion on the occupancy front , Class D average occupancy closed the period already back down to the August 2019 level .
The oddity in the Class D data was the rent growth . During the same period in which average occupancy has plunged and net absorption has been negative by 1,000 units , Class D average effective rent rose by 4.5 % - outpacing last year ’ s growth . Operators appear to have chosen rent growth over occupancy , but that is unlikely to persist much longer given how far occupancies have already fallen . The average Class D unit closed the period leasing for about $ 955 for new residents - up by around $ 110 per month from 24 months ago .
Takeaways
With lackluster apartment demand persisting from earlier in the year , rent growth momentum from a price class perspective has been affected significantly . Rent gains have remained well above pre-pandemic norms , but Class A and Class B rent growth has been 50 % less than in the same period last year , while Class C has cooled some as well . The lone exception was in the segment with negative absorption and the worst average occupancy performance - Class D .
Now that the calendar is shifting into the seasonally softer portion of the year , operators are likely going to have to sacrifice rent growth to mitigate occupancy losses . That is especially the case outside of the Class A segment .
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