Employment growth in the Northwest slowed during the third quarter, with the region posting a 1.6 percent gain in nonagricultural wage and salary employment during the 12 months ending August 1999. This compares with the August 1997 to August 1998 period, when employment grew by 2.8 percent. Washington's annual rate of growth eased back to 2.1 percent by August, but the State still leads the region in the rate of growth. The regional unemployment rate was 4.9 percent as of August. Washington still had the lowest rate, 4.3 percent, followed by Alaska at 4.6 percent, Idaho at 5.4 percent, and Oregon at 5.7 percent. The unemployment rates were much lower in the region's major metropolitan areas. In Seattle the rate was 3.2 percent, followed by Boise at 3.4 percent, Anchorage at 3.6 percent, and Portland at 4.5 percent.

Strong demand for housing sales continued through the third quarter in the Northwest, although some markets were slightly behind the record-level sales in 1998. The Washington State Center For Real Estate Research reported an 8.7-percent increase in home sales for the State through June 1999. Sales in the Seattle metropolitan area through September 1999 were down 3 percent compared with the January-September period in 1998. The drop reflects the lack of available listings and the almost 10-percent increase in sales prices. The median sales price in the Seattle area increased to $219,000. In Boise, sales for 1999 through September were up slightly more than 8 percent compared with the same period in 1998. The median sales price was $112,800, a 3-percent increase. Sales for the period were down less than 3 percent in the Portland area, and the median selling price rose by 3 percent to $159,100.

Residential building permit activity in the Northwest during the first 9 months of 1999 was down less than 2 percent for single-family homes. Permits were issued for approximately 46,000 homes. Multifamily activity in the region, at 18,050, was off 5 percent from 1998's volume for the same period. Single-family permit activity in the Puget Sound area totaled 13,326 homes in the first 9 months of 1999, down 2 percent from a strong 1998 volume for the same period. The market for new sales housing in the Boise area continues to be very active, with single-family building permits up 6 percent compared with the first 8 months of 1998.

The Northwest's major rental housing markets were very strong. In the Portland and Boise areas, apartment vacancy rates were in the 5- to 6-percent range at the end of the third quarter. Rental market conditions remain relatively tight in much of the Puget Sound region, and demand for new rentals remains strong. Vacancy rates in close-in neighborhoods are 3 percent or less, and multifamily permit activity in the first 8 months of the year was up 9 percent to 8,206 units. There is increased competition in high-end units—renting for $1,000 or more—in some suburban markets.

The Seattle area's trendiest market is in downtown, with approximately 700 units currently in the pipeline. At present, rents for two-bedroom units typically range from $1,400 to $1,900 monthly. Apartment vacancy rates are in the 3-percent range according to the Dupre+Scott Apartment Vacancy Report. Seattle's Rainier Valley area, about 5 miles southeast of downtown, is about to benefit from the largest grant/loan in the country to go to a project under HUD's Brownfields Economic Development Initiative. Rainier Court, a proposed $45 million mixed-use residential, retail, and office project, will receive $15.5 million in loan guaranties and a $1.75 million grant. The project will have more than 240 units of affordable and market-rate housing. Nearby, a 481-unit World War II-era public housing project will be redeveloped into a mixed-income rental project. The 65-acre development called Rainier Vista will include 250 rental units of housing for very-low-income renters, 100 units for low-income elderly renters, 200 affordable homes for sale to low-income buyers, and 300 homes for sale to market-rate buyers. The project has received a $35 million grant from HUD's HOPE VI redevelopment program.

Spotlight on Eugene-Springfield, Oregon

The Eugene-Springfield metropolitan area's major industries are agriculture, education, high technology, manufacturing, and recreation/tourism. Its two largest cities, Eugene and Springfield, are separated by the Willamette River. The population of the area as of July 1998 was about 314,000 persons, reflecting an average annual increase of 1.2 percent since 1990.

Employment growth has slowed in the past 12 months in the Eugene-Springfield area. As of August 1999 there were 142,100 jobholders, a 1.8 percent increase compared with a 2-percent increase during the previous 12-month period ending August 1998. The slower rate of growth is the result of continued job losses in the timber industry and reduced job growth in the high-technology sector as initial hiring for several new companies has been completed.

Since 1990 the leading growth sectors have been in manufacturing of office machinery, transportation equipment, and electronic equipment. The growth in these industries has helped offset the declines in the lumber and wood products industry. Another leading industry in the area is business/professional services, where employment has grown 82 percent since 1990.

Sales of new and existing homes have been brisk throughout 1999. Sales through August totaled 2,735, up 3.6 percent from the same period last year. The median price of a home sold was $136,800, up 8.7 percent from the price for the same period in 1998. Inventory levels were relatively unchanged from a year earlier. The average number of days a home stayed on the market during the first 8 months of 1999 was 81 days, well below the 104 days reported for the same period last year.

Single-family building permit activity in the first 9 months of 1999 totaled 909 homes, down 12 percent compared with the same period in 1998. Starter homes are being built for approximately $130,000. Demand for moderately priced homes ($150,000 to $250,000) remains strong, but activity in the high end ($350,000 or more) has slackened considerably this year. The median price of a new home in the Eugene-Springfield area as of August was $245,000.

Rental housing market conditions are tight in much of the metropolitan area. However, with 1,200 units in the pipeline, local observers expect conditions to begin to ease during the next 6 months. From 1990 through 1998, permits were issued for approximately 730 multifamily units a year. Since 1995 multifamily activity in the metropolitan area has averaged approximately 1,115 units annually. More than 90 percent of the multifamily rental housing built since 1990 has been market-rate apartments. In the first 9 months of 1999, permits were issued for 661 units, up more than 25 percent compared with 1998. According to a survey conducted by the appraisal firm Duncan and Morgan in the Fall of 1999, the overall apartment vacancy rate for the metropolitan area was 4.4 percent.