Employment growth in the Mid-Atlantic economy has slowed over the past 12 months, primarily due to labor shortages. Nonagricultural employment grew by 115,100 jobs, less than 1 percent, between August 1999 and August 2000. Delaware led the region with an employment gain of 2.4 percent, followed by Maryland with a 2-percent gain and Virginia with a 1.6-percent gain. Employment levels in Pennsylvania remained unchanged over the 12 months.

The service sector continued to boost Delaware's economy. During the 12-month period ending August 2000, employment increased by 10,600, with services accounting for almost 40 percent of the job gain. According to the Delaware Economic Development Office, the strategy for increasing employment is to seek industries in the life sciences, information technology, and advanced technology fields. The employment outlook for the rest of 2000 remains favorable, although the State is not expected to maintain the growth rate of the past year due to labor shortages, interest rate hikes, and rising oil prices.

Employment in the Washington, D.C. area's Northern Virginia suburbs rose 3.8 percent, more than double the State average during the 12-month period ending in August 2000. Continued rapid growth in the high-technology sector is making the area one of the foremost locations of firms in this industry. In recent developments, Dominion Semi-conductor in Manassas has announced a $700 million, 600-employee expansion of its facilities.

The region's unemployment rate declined to 3.6 percent in August 2000, compared with 3.9 percent in August 1999. Unemployment rates ranged from 2.6 percent in Virginia to 5.4 percent in the District of Columbia. Among metropolitan areas, the Richmond and the Washington, D.C. metropolitan areas recorded the lowest rates, both at 2.3 percent. Northern Virginia posted a 1.3-percent unemployment rate and has an estimated 40,000 vacant high-technology jobs.

Homebuilding activity in the Mid-Atlantic region slowed significantly during the first 9 months of this year. Building permits were issued for 80,612 single-family homes through September, down more than 5 percent compared with the volume for the same period in 1999. Except for a marginal increase in construction of single-family homes in Maryland, activity was down in every State in the region.

A robust economy continued to boost housing de-mand in the Washington, D.C. metropolitan area. Existing sales in the metropolitan area through September totaled 73,819 homes, 10 percent above the first 9 months of 1999. New home sales through August totaled 19,481, according to the Meyers Group.

Although homebuilding is down and sales are slower than this time last year in some areas, the market is still very strong for both new and existing homes across the region.

Existing home sales in Virginia through August totaled 62,734 homes, a 6-percent increase over 1999, according to the Virginia Association of REALTORS®. The median sales price for the State was $130,000.

The Maryland Association of REALTORS® reported that home sales have slowed throughout the State. There were 45,964 existing homes sold in the State during the first 8 months of 2000, down 3.4 percent compared with last year's levels. The median sales price as of August 2000 was $148,200. Higher interest rates and a decline in available inventory have slowed existing home sales in the Baltimore metropolitan area.

The sales market in Philadelphia's City Center submarket has remained a seller's market for nearly 2 years. Market conditions are very tight, and there is a shortage of houses available for sale. Demand is so strong that prices are escalating, and bidding wars are becoming more commonplace. City planning department data indicate that the Center City is attracting more suburban buyers, as well as buyers new to the region, than any other city neighborhood.

Apartment construction, as measured by building permit activity, was down throughout most of the region during the first 9 months of 2000. Pennsylvania was the only State to post an increase, 14 percent, due to significant multifamily activity in the smaller metropolitan areas and suburban Philadelphia. The increase offset an 18-percent decline in Pittsburgh. The Washington, D.C. metropolitan area led the region in multifamily building activity, with permits issued for 6,827 units in the first 9 months of 2000, an 18-percent increase.

Most of the rental housing markets in the Mid-Atlantic's major metropolitan areas are balanced to tight. The Northern Virginia suburbs continue to be the hottest rental market in the region and the Nation. Vacancy rates in many Class A apartment developments are below 1 percent, and rents have risen as much as 15 percent on turnover. The first high-rise residential project to be built in the city of Philadelphia in more than 20 years broke ground in mid-September. The $75 million luxury apartment complex, expected to be completed in early 2002, will be constructed on Pier 30, south of the main Penn's Landing area, where a $300 million entertainment-museum-retail center will began construction this fall. This 242-unit development will have a range of unit sizes, from studios with rents of $900 per month to 2,000-square-foot, three-bedroom units with rents of $3,000 per month.

Spotlight on Richmond-Petersburg, Virginia

Employment in the Richmond-Petersburg metropolitan area has grown at a steady pace during the past 2 years. As of August 2000, wage and salary employment totaled 557,200, a 2.2-percent increase compared with August 1999. Despite steady cutbacks in the tobacco industry and mergers in the financial-services sector, economic activity in Richmond has been spurred by solid growth in services and in retail trade. Since 1990, employment in services has increased 46 percent, and retail trade has increased 14 percent. The labor market is extremely tight, with an unemployment rate of 2.3 percent in August 2000.

The Richmond metropolitan area experienced a relatively modest rate of population growth over the past decade. Between 1990 and 1999, the population increased 11 percent to 961,000 persons. During the same period the population in the city of Richmond fell 2 percent to 199,300. Suburban Chesterfield and Henrico counties have been the area's major growth centers, with populations estimated at 253,400 and 244,700, respectively, as of July 1999.

The city of Richmond remains the major employment center for the metropolitan area but has experienced a modest decline since 1991. Between 1991 and 1998, employment in the city declined 4 percent, compared with a 29-percent increase in Henrico County. The volume of industrial and office development in recent years indicates that Henrico County is rivaling the city. The number of households in the city has not declined as the population has. With 1 of every 10 jobs in the metropolitan area located in this city's central business district, strong residential revitalization efforts in the downtown area and nearby neighborhoods in recent years have been highly successful, often exceeding expectations. Single professionals and empty nesters have been attracted to housing in renovated historic buildings in old industrial neighborhoods southeast of the capitol. These areas have also developed as tourist and retail districts. The Fan District near downtown remains a desirable neighborhood.

Homebuilding activity has been very strong in the Richmond area since 1990. Single-family building permits in the metropolitan area averaged 5,813 homes annually between 1990 and 1999. Building activity has slowed, and through September, permits were issued for a total of 4,486 units, a 14-percent decline from the same period in 1999. Local sources cite a shortage of buildable lots and higher interest rates as explanations for this decline. The new home market remains strong in the $300,000-and-up price range, but activity below $225,000 has dropped considerably in recent months. Existing home sales through August 2000 were down 7 percent compared with the first 8 months of 1999; activity was constrained by a shrinking sales inventory. The average sales price for the period was $160,800, up less than 1 percent compared with last year.

Multifamily housing permit activity plummeted during the first 9 months of this year, down 76 percent compared with the same period a year ago. Only 266 multifamily units were permitted so far this year, compared with an average of 1,400 units annually during the past 3 years. The decline is the result of the large number of units still in the construction pipeline and a shortage of available sites.

Tight rental housing market conditions in the Richmond metropolitan area have eased recently due to increased production. Carolinas Real Data estimates that the vacancy rate of apartments was 5.3 percent in August, compared with 3 percent a year earlier. New apartments, primarily in Henrico County, continue to experience strong absorption. The apartment market in downtown Richmond is booming as developers take advantage of the city's tax abatement program to convert old warehouses and office buildings to residential rentals. Rents for these renovated units are $550-$900 for a one-bedroom unit and $695-$1,700 for a two-bedroom unit.