Total nonagricultural wage and salary employment in the Northwest region during the third quarter remained below its third-quarter 2001 level (down by 1.5 percent). However, individual States’ performance varied considerably. As of September 2002 employment in Alaska was 1.3 percent above the levels of September 2001, spurred by gains in the construction, service, and retail sectors. Manufacturing and mining remained down compared with September 2001 levels. Idaho recorded small gains in health services, engineering management services, amusement, and FIRE, resulting in a 0.1-percent gain as of September 2002. In Idaho chemicals, logging, electronic and other electrical equipment, and lumber and wood products all declined compared with last year.

In contrast, employment was below September 2001 levels in Oregon and Washington. Washington’s September 2002 total nonagricultural wage and salary employment fell 2.2 percent compared with the same period for 2001. Finance, health services, and Government were the only bright spots for the Washington economy. Every other sector registered declines over the past 12 months. Boeing layoffs continued, totaling 15,500 as of September 2002 in the Puget Sound region, or 61 percent of the 25,400 Boeing jobs lost nationwide. The company expects layoffs to total 30,000 nationally by the end of 2002 and recently indicated that additional layoffs in 2003 are probable with 60-day notices being sent as early as November 2002.

In Oregon nonagricultural employment declined by 1.4 percent with losses primarily confined to the Portland metropolitan area where the construction, electronic and other electrical equipment, printing and publishing, and machinery sectors were all well below year-ago levels. The State’s high-technology sector remained weak due to declining export markets for technology goods and services.

Unemployment rates in the region are down from peaks earlier in 2002 but remain well above levels of September 2001. The regional average unemployment rate for the 12 months ending September 2002 was 7 percent compared with 5.6 percent for the same period in 2001. The highest unemployment rates were recorded in Oregon and Washington at 7.4 percent and 7.2 percent, respectively. Idaho recorded the lowest unemployment rate in the region at 5.3 percent and Alaska was 6.3 percent.

Sales market conditions throughout the region have slowed because of the weaker economy but continue to remain relatively stable owing to favorable mortgage interest rates. Oregon’s major markets recorded a 3-percent increase in existing homes sold for the first 9 months of 2002 compared with the same period in 2001. Oregon’s major markets also recorded increases in median sales prices of 1 percent to 3.5 percent. In the Portland area sales of new and existing homes rose 1 percent year-to-date compared with last year, and the median sales price rose 3 percent to $172,800. In the Boise metropolitan area existing home sales increased 0.7 percent and the median sales price rose 2 percent to $126,200. In Anchorage sales have fallen off considerably, down 3 percent year-to-date September 2002 compared with the same period in 2001. The average selling price increased 17 percent to $220,000 over the same period.

Existing sales activity in the Seattle metropolitan area totaled 25,514 homes in the first 9 months of 2002, down 1.5 percent compared with the first 9 months of 2001 according to the Northwest multiple listing service (MLS). The median sales price continued to rise, increasing 5.6 percent to $261,300 as of September 2002. Existing home sales rose 2.5 percent in the Tacoma area and 6 percent in the Olympia area compared with figures for September 2001. Sales in the Bremerton area continued to taper off during 2002 with closings 6 percent below the level of a year ago.

Existing condominium sales in the Seattle metropolitan area were dampened by slower economic conditions, down 3 percent compared with the January–September period in 2001, but the median sales price rose 3 percent. Condominium sales were robust in the Tacoma area, up 28 percent, and in the Bremerton area, up 12 percent. New construction condominium sales, particularly in downtown Seattle, continued to struggle during the third quarter of 2002. Sales were down 22 percent year-to-date through September 2002 compared with the same period in 2001.

Single-family building permit activity in the Northwest during the first 9 months of the year totaled 47,872 homes, up 7 percent compared with the same period in 2001. In the Puget Sound area (Bremerton, Seattle-Everett, and Tacoma), the volume of building permit activity (13,239 homes) was also 7 percent above the year-earlier period. In the Portland-Vancouver metropolitan area activity for the first 9 months of the year dropped 3 percent to 8,222 homes.

Rental markets in the Northwest grew increasingly competitive in major market areas owing to the combination of new construction and slower economies. The rental vacancy rate in the Portland metropolitan area climbed to 9 percent overall, up from 6 percent in the third quarter of 2001. New, larger projects in suburban areas built to fulfill demand generated by high-technology employment were experiencing the highest vacancy rates due to the current slowdown in this sector. In smaller Oregon markets conditions were tight to balanced. The Eugene-Springfield area remained tight owing to record-level enrollment at the University of Oregon; the Salem and Medford markets remained balanced with vacancies in the 5-percent range. In Boise, Idaho, rental market conditions were markedly softer due to an oversupply of new construction rental units. The rental vacancy rate reached 9.5 percent as of the third quarter of 2002, up from 4 percent in the third quarter of 2001. Rental concessions were commonly being used to combat the higher vacancy rates. In Idaho’s smaller markets conditions were tight to balanced.

Rental market conditions remained strong in most areas of Puget Sound during the quarter but were competitive in Seattle. In the Seattle metropolitan area the vacancy rate as of the third quarter 2002 was estimated at 7.7 percent, down from 8.5 percent in the previous quarter but well above the 5.4-percent rate measured for the third quarter of 2001. The drop in vacancies between the second and third quarter was due to an increase in affordability as rents remained essentially unchanged and the use of rent incentives increased. Conditions were balanced in Tacoma, with the vacancy rate at 6 percent, and in Olympia, at 4.4 percent. The Bremerton area continued to experience tight market conditions with the vacancy rate at 2.7 percent, down from 3.3 percent a year ago. In eastern Washington the Tri-Cities market remained tight, but two large rental projects presently under construction are expected to ease the tight market conditions. The Spokane market remained balanced with a 5-percent vacancy rate.

Multifamily building activity totaled 12,487 units in the Northwest region during the first 9 months of 2002, an 18-percent decrease compared with the first 9 months of 2001. The decline was largely attributable to lack of activity in the Seattle-Everett area, where multifamily permits fell 28 percent to 3,979 in response to higher than usual vacancy rates.