For the 12 months ending in August, employment growth in the Midwest slowed to 1 percent, down from 1.5 percent in the comparable period in 1999. Business and health services, trade, and construction provided 60 percent of the 220,000 new jobs added. The unemployment rate in the region was 3.8 percent, unchanged from August 1999. Ohio's construction industry is expected to stay robust, bolstered by downtown Cincinnati's $2 billion revitalization program and new office and retail building throughout the State. In Chicago, a $400 million expansion at the Ford Motor Companies plant on the city's southeast side is expected to add 1,000 new jobs.

The Chicago Association of REALTORS® predicts that 2000 will likely be another big year for home sales. Existing home sales in the metropolitan area in the first 9 months totaled 85,600 homes, compared with 87,600 for the same period in 1999. Prompted by the unprecedented demand for affordable housing, the city of Chicago will make $75 million available this year to prospective buyers for low-interest rate loans, closing costs, and downpayment assistance. In Minneapolis-St.Paul, existing home sales through September were up 1 percent to 38,100, while the median sales price increased by 9.6 percent to $145,800. The Ohio Association of REALTORS® reported that 82,700 existing homes were sold in the State in the first 9 months of 2000, down 2 percent from the same period in 1999.

Homebuilding remains robust in the Midwest region. Single-family building permits were issued for 153,287 homes in the first 9 months of 2000, down 5 percent compared with high levels for the same period in 1999. The Builders Association of the Twin Cities reported that new home construction in the first 9 months of 2000 continued at near-record levels for the Minneapolis-St. Paul area. During the period, permits were issued for 12,200 homes, less than 5 percent below the 1999 volume for the same period. Chicago's strong economy is supporting another good year. Permits were issued for more than 21,060 homes in the first 9 months of 2000, just slightly less than the activity for the same period last year. Michigan builders are optimistic about new home sales and production. The Building Industry Association of Southeast Michigan expects 20,000 new homes to start construction in the Detroit-Ann Arbor area this year, down 10 percent from 1999. The Wisconsin Builders Association reported that labor shortages are beginning to constrain homebuilding.

Multifamily housing construction activity in the Midwest region has also been strong in 2000. Through September, building permits were issued for 46,214 units, a 4-percent increase over the comparable 1999 period. Activity in Illinois was up 10 percent due to strong gains in the Chicago area. The city of Chicago's downtown apartment market continued to see increased demand for new luxury housing. Local sources reported strong leasing activity in the Chestnut Towers and the Superior Place luxury apartments in the city's River North area.

The Indianapolis area apartment market is generally soft and will likely remain soft well into next year. A CB Richard Ellis survey of 105,600 apartment units in Indianapolis as of the third quarter showed an overall vacancy rate of 9.4 percent. The apartment vacancy rate in large properties (100 or more units) increased significantly during the past 2 years as a result of the substantial increase in supply. An estimated 2,900 new units are expected to come on the market in 2000, and another 2,600 are due next year. One apartment developer reported that rents are flat and concessions are widespread, particularly in northeast Indianapolis, where there is a concentration of new apartments.

Rental housing market conditions remain strong in Ohio's major markets. Apartment production in the Columbus metropolitan area continued at a fast pace, with multifamily permit activity up 18 percent to 4,463 units in the first 9 months of 2000. The rental market remains balanced. A third quarter 2000 survey of 120,000 units by the Danter Com-pany reported apartment vacancy rates in the 5- to 6-percent range.

Cleveland's downtown market continues to experience strong demand for new rentals, particularly in the Warehouse District. In Cincinnati, developers are planning to significantly increase rental housing in the downtown area during the next 3 years. Approximately 1,600 new apartment units are planned for the Central Business District, Adams Landing, and Banks areas. Multifamily production in the Minneapolis-St.Paul area, averaging approximately 4,000 units annually, is still short of the demand for new apartments. Apartment Search's September 2000 survey of 136,100 units showed vacancies in the 1- to 2-percent range.

In Madison, multifamily housing construction has been strong for the past 2 years, averaging 1,800 units annually. Despite increased supply, the apartment vacancy rate was a low 3.9 percent as of the third quarter of 2000. The Madison Area Apartment Association reported that new rentals in suburban Dane County are being rented well in advance of completion.

Spotlight on Rochester, Minnesota

Rochester, a fast-growing area in southeastern Minnesota, has seen some recent job cutbacks in computer manufacturing, but growth continues at other high-technology firms and health service facilities. The world-famous Mayo Clinic and its associated hospitals are in the midst of a major multiyear expansion, which has boosted the local economy.

Population in the metropolitan area increased from 106,400 in 1990 to 121,400 in 1999, a 14-percent gain. Between 1995 and 1999, nonagricultural employment grew at a rapid rate, averaging 4.4 percent annually. However, the rate of growth has slowed in the past 12 months to 2.2 percent, with nonagricultural jobs reaching 83,700 by August 2000. In these 12 months, the health services gained 1,600 jobs, helping to offset losses in manufacturing employment.

The construction industry has been extremely busy, with major projects happening in both the downtown area and in the suburbs. Homebuilding also has been very active, but it has not kept pace with demand. In 1999, single-family permit activity totaled 830 homes, an 8-percent increase over 1998. Through September of this year, permits were issued for 643 single-family homes, slightly greater than the number issued last year at this time. To permit further development, the city of Rochester is hoping to annex 917 acres of an adjacent township, and Olmstead County has designated 5,400 acres northwest of the city for development.

The lack of affordable sales and rental housing throughout the metropolitan area has hampered the expansion plans of many local employers. An innovative program to address this problem was announced late in 1999 by the Rochester Area Foundation and the Greater Minnesota Housing Fund. The First Homes program raised $9.5 million of its $12.75 million goal in contributions from various foundations and nonprofits by August 2000. These funds will be used to leverage $105 million for construction of 875 affordable new homes and apartments for working families in the Rochester metropolitan area.

The city has also been heavily involved in assisting in the development of affordable housing, principally for homeownership. In 1999, the city contributed $26.8 million from the proceeds of housing revenue bonds and tax increment financing (TIF) to help develop two apartment projects for seniors and allocated another $850,000 in TIF money for several rental projects for general occupancy. TIF money was also used for site preparation of 2 single-family developments containing 80 affordable new homes. In 2000, the city provided $8.4 million to help assist in developing 100 affordable townhomes for rent and 125 single-family homes under the First Homes program.

HUD has been active in Rochester's housing market. The loan limit recently was raised to $137,655 for a single-family home. As a result, FHA's market share of existing home sales in the metropolitan area as of the third quarter was 14.9 percent, compared with 12.4 percent in the second quarter of the year. HUD has also recently helped finance construction of two apartment developments: the 144-unit Essex Place, completed late last year, and the 98-unit Brittany, scheduled for completion in July 2001. HUD funded a 40-unit project for the elderly under the Section 202 program in FY 1998, which is scheduled for completion in March 2001.