Michael Lacy
Senior Vice President, Operations at UDR
Thanks Tom. Today I'll cover the following topics. Our second quarter same store results, early third quarter operating trends, our improved full year same store growth guidance, including underlying assumptions and regional operating trends. To begin second quarter year over year same store revenue and NOI growth of 2.5% and 2%, respectively, were slightly above our expectations.
Quarterly sequential same store results also outpaced initial forecasts. These results were driven by first, 2.4% blended lease rate growth, which was driven by renewal rate growth just shy of 4% and new lease rate growth of 50 basis points. New lease rate growth improved by 300 basis points versus the first quarter as concessions stabilized and demand increased, which resulted in improved pricing power. Second 47% annualized resident turnover was 300 basis points below the prior year period and our best second quarter retention in more than a decade. This has enabled us to increase renewal rate pricing through at least August and has led to more favorable blended lease rate growth.
Third, occupancy remains strong at 96.8%, supported by healthy traffic and leasing volume. New York, Boston, Washington DC, and Seattle, which collectively constitute 40% of our same store pool, were standouts averaging higher than 97% occupancy during the quarter. And fourth other income growth was nearly 9% and was driven by our continued innovation along with the delivery of value add services to our residents. Shifting to expenses. Quarterly year over year same store expense growth of 3.7% came in better than expectations and was primarily driven by reduced repair and maintenance costs as well as insurance savings.
Repair and maintenance growth of less than 1% was partly due to our improved resident retention and having 500 fewer unit terms than a year ago, while insurance savings of nearly 5% was driven by lower claims activity. Moving on core operating trends have remained resilient in July and key metrics have largely followed typical seasonality. First, July blended lease rate growth is expected to be in the mid 2% range, which is slightly higher than June results and follows normal historical sequential rent growth trends. New lease rate growth is slightly negative on average, while we have had success increasing our renewal lease rate growth closer to 5% from 4% in the second quarter.
In terms of relative performance, the east coast is showing the most strength with blended lease rate growth of approximately 4%. This is followed by the west coast at 3% on average and the Sunbelt at approximately negative 1%. Based on current trends, we expect east coast leadership to persist through at least the remainder of the third quarter. Second, resident retention continues to compare well against historical norms and July will represent the 15th consecutive month our year over year turnover has improved. Relative affordability compared to other forms of housing is a benefit to the apartment industry in total.
Given the level of home prices and mortgage rates, the average cost of owning a home across UDR markets is nearly $5,500 per month. By contrast, the average rent for a UDR apartment home is approximately $2,500 per month, thereby creating annual shelter cost savings of $36,000. This disparity has led to a record low level of our residents moving out to buy a home. Furthermore, because of our ongoing customer experience project, our resident retention over the past year has improved by approximately 210 basis points relative to the peer group average.
This is a testament to our team's focus and execution on our innovative, data driven approach to customer service. Ultimately, improved retention should drive better pricing power, higher occupancy, increased other income, reduced expenses, lower capex and margin expansion. We're still early in innings of capturing these benefits, but believe the incremental opportunity is in the $15 to $30 million range. Third, occupancy remains high but has trended slightly lower to 96.2% to 96.3% in July due to elevated new supply coming online and typical seasonal operating trends.
Markets facing heavy supply including Nashville, Dallas and Tampa, 16% of our NOI have seen occupancy decline by approximately 100 basis points on average compared to the second quarter. Conversely, occupancy remains in the mid to high 96% range on average across markets facing less supply, such as New York, San Francisco and Orange county, which make up 26% of our NOI. Strategically, we anticipate regaining portfolio occupancy later in the third quarter as we tactically adjust our operating approach ahead of a seasonally slower leasing period.
And fourth, other income continues to grow in the high single digit range in July, similar to what we achieved in the first half of the year. As a reminder, other income constitutes roughly 11% of total revenue. We remain pleased with the trajectory of other income initiatives such as the rollout and penetration of building wide WiFi, as these contribute significantly to incremental same store revenue growth. Based on our results for the first seven months of the year, we raised our full year 2024 same store growth guidance in conjunction with yesterday's release. We are encouraged by the resiliency of various forward demand indicators such as year to date job growth and wage growth, but we remain somewhat cautious given the potential for macroeconomic volatility in an election year combined with elevated supply deliveries in the back half of 2024.
To provide details on our guidance increases starting with same store revenue growth, we raised our midpoint by 50 basis points, resulting in a new range of 1% to 3%. The primary building blocks to achieve the 2% midpoint include the following. First, our 2024 earn in of 70 basis points. Second, portfolio blended lease rate growth is forecast to be approximately 130 basis points in 2024. This represents a 60 basis point increase compared to our initial guidance. Given blended lease rate growth of approximately 180 basis points through the first seven months of the year this implies a deceleration to 60 basis points on average for the remaining five months of the year.
Using a midyear convention, our full year blended lease rate growth expectation should add about 65 basis points to 2024 same store revenue growth, reflecting a 30 basis point improvement versus our prior expectations. Underlying our full year blended rate growth forecast our assumptions of 3.5% to 4% renewal rate growth and approximately negative 1% new lease rate growth. Third, we expect the combination of occupancy and bad debt to be roughly flat year over year in 2024 in line with our prior expectation. And fourth, innovation and other operating initiatives are expected to add 70 basis points to our 2024 same store revenue growth, which is an increase of 25 basis points versus our prior guidance.
The bulk of this growth should come from the continued rollout of property wide WiFi initiatives along with a variety of other property enhancements. 3% high end of our same store revenue growth range is achievable through improved year over year occupancy, additional accretion from innovation, higher blended lease rate growth, or a combination thereof. Conversely, the low end of 1% reflects full year blended lease rate growth of approximately 50 basis points, some level of occupancy loss, and a moderation in other income generated by our innovation.
Moving on to same store expense growth, we lowered our midpoint by 25 basis points to 5%, with the full year range now at 4% to 6%. The improvement was primarily driven by constrained insurance and repair and maintenance expense growth. As a reminder, same store expense growth of 7.5% in the first quarter was elevated due to comping off of a one time $3.7 million employee retention credit we realized at the beginning of 2023. Absent this factor, we would expect normalized same store expense growth for the full year to be in the low 4% range, or approximately 80 basis points lower than our updated midpoint.
Turning to regional trends, our coastal results have exceeded our expectations while our sunbelt markets are largely in line. More specifically, the east coast, which comprises approximately 40% of our NOI, was our strongest region in the second quarter and Washington, DC was our best performing market, driven by strength in Northern Virginia. Second quarter weighted average occupancy for the east coast was 97.1%, blended lease rate growth was 4.7% and year over year same store revenue growth was 3.8%. With continued healthy demand and relatively low new supply, we expect this region to be our strongest throughout the rest of the year. The West coast, which comprises approximately 35% of our NOI, has performed better than expected year to date but stabilized somewhat in the second quarter following tremendous momentum in the first quarter.
We are encouraged by various employers more strictly enforcing return to office mandates as well as increased office leasing activity from technology and AI companies, but are also cognizant of corporate relocations that influence job and wage growth. Absolute levels of new supply remain low at less than 2% of existing stock on average across our west coast markets, which we expect will lead to a more favorable supply dynamic in the coming quarters.
Lastly, our sunbelt markets, which comprise roughly 25% of our NOI, continue to lag our coastal markets. Year to date performance was in line with our original expectations through the beginning of June, at which time we began to see some pricing deterioration due to elevated new supply and the concessions that came with it. We tactically decided to hold great to best set up our rent roll for future quarters, which resulted in occupancy drifting lower. While our Sunbelt markets broadly have more robust job growth than our coastal markets, we remain cautious on the region in the near term given the very high absolute levels of new supply coming online.
To close, our coastal markets, which comprise 75% of our NOI, have performed above initial expectations. While our Sunbelt markets, which comprise 25% of our NOI, are largely in line with expectations. Our diversified portfolio enables us to be surgical with regard to how we operate each market and each asset, allowing us to leverage the strong fundamentals of our industry. This, coupled with continued innovation that will further expand our operating margin over time, maximizes revenue and NOI growth. My thanks go out to our UDR associates nationwide for your dedication toward meeting the challenges we face head on as we continuously innovate to drive strong results. I will now turn over the call to Joe.
