The rate of job growth in the New England economy has continued to decline in recent quarters, resulting in an increase of only 0.4 percent in the 12 months ending September 2001. Massachusetts and Maine registered reasonable job growth, and Rhode Island had a small increase. All six States lost employment in goods-producing industries, primarily in manufacturing. In Massachusetts, increased employment in the construction sector helped offset some of the loss in manufacturing employment. In services-producing industries all States gained jobs except Connecticut. Maine and Massachusetts had the highest gains, adding a total of 47,200 jobs at 2.1 and 1.3 percent, respectively. The unemployment rate in New England is at 3.8 percent compared with 2.6 percent in September 2000. The highest unemployment rates in New England were in Rhode Island and Massachusetts with 4.0 and 3.9 percent, respectively. The lowest rates were in Vermont and Connecticut with 2.9 percent and 3.1 percent, respectively.

Through September 2001 residential construction, as measured by building permits, was down 3.7 percent in the region compared with the same period in 2000. The only State showing an increased level of activity was Vermont, with increased levels of multifamily construction primarily in the Burlington area. The Stamford-Norwalk area in Connecticut and the Portland and southern Maine areas in the Pine Tree State also showed increased levels of multifamily development. Although Massachusetts had a slight decrease in multifamily activity, it still has more than 50 percent of the multifamily construction in the region. Almost all of these multifamily units are located either in the Boston area or in the Barnstable-Yarmouth, Lawrence, Lowell, and Worcester areas. Single-family construction is approximately 5 percent below the comparable level from 2000 with only Vermont producing at a higher level than in the past year. Most of this activity is in central and southern Vermont. Activity in Burlington has slowed by approximately 7.5 percent through September 2001.

Existing home sales in New England have been mixed through the first half of 2001 compared with the same period in 2000. The overall decline in annual rate of sales was 1.3 percent. Whereas sales in Rhode Island and Connecticut were up approximately 8 and 6 percent, respectively, the remaining New England States registered declines ranging from 3 to 6 percent. Following increases of 1.0 percent in 1999 and 3.2 percent in 2000, it seems that levels of existing home sales will decline in 2001. In Massachusetts, although sales for July and August were strong, September sales dropped significantly (11 percent) compared with September 2000.

Despite lower sales volume, New England States continue to post sharp increases in home prices. According to the Office of Federal Housing Enterprise Oversight (OFHEO), house-price appreciation in the New England region was 11.3 percent higher in the second quarter of 2001 compared with the same period in 2000. All 6 New England States were ranked in the top 14 States for price appreciation, ranging from 8.2 percent in Vermont to 12.8 percent in New Hampshire. In Massachusetts, according to the Massachusetts Association of REALTORS^®, the average home price as of September 2001 was $310,200, up 7 percent from the average price in September 2000.

Rental markets in New England metropolitan areas continue to be strong. Almost without exception, rental vacancy rates are in the low single digits, resulting from years of sustained job growth and the addition of very modest levels of new rental housing. This has kept markets extremely tight and caused tremendous pressure on rents.

Spotlight on Portsmouth-Rochester, New Hampshire-Maine

The Portsmouth-Rochester metropolitan area encompasses most of Strafford County, New Hampshire, and several towns in southern York County, Maine. It has recently established itself as a burgeoning high-technology growth area and has always had a very strong economic base in tourism. Nonfarm wage and salary employment during the 12-month period ending September 2001 averaged 126,500 jobs, an increase of 3,100 jobs (2.5 percent) from the same period ending September 2000. This is above the average annual increase of 2,800 jobs since the recession of the early 1990s but slightly below the increase of 5,000 jobs registered from 1999 to 2000. All of this recent job gain has been in services-producing industries, although goods-producing industries have maintained a stable level of jobs during the 1990s. This area, supported by a skilled high-technology workforce and bolstered by in-migration, has been named “eCoast” to publicize the strong new economy identity. The Portsmouth area is home to approximately 400 high-technology firms. The strong infrastructure, excellent transportation system growing outward from Boston and eastern Massachusetts, and coastal location have created a positive quality-of-life environment that has drawn many people to relocate seeking employment.

The manufacturing and construction industries have added an average of 300 jobs annually since the early 1990s. Services-producing industries, led primarily by business services and tourism, have contributed approximately 2,500 jobs annually since 1990 and more than 3,200 jobs in the 12-month period ending September 2001.

Although some jobs have been lost in recent months because of the effects of retrenchment in high-technology capital investments, it is anticipated that the Portsmouth area economy will weather a downturn better than most other areas will because of the continued success of the Pease International Tradeport (formerly Pease Air Force Base) and the aggressive marketing support of the eCoast business community.

Single-family permit activity increased steadily throughout the preceding decade. However, as of September 2001, residential building activity was down approximately 8 percent from the same period in 2000. This is primarily because resources, especially the labor supply, have been constrained. Multifamily permit activity has been relatively low at slightly more than 100 units annually. Lack of available sites and costs of construction seem to be primary reasons for the low level of multifamily development, resulting in a tight rental market during the past 10 years.

The sales market in the Portsmouth metropolitan area has generally been strong; however, according to the New Hampshire Housing Finance Authority, data for the first half of 2001 indicate a drop in overall sales compared with the same period in 2000. The median sales price of existing homes was up 8.8 percent to $159,900, and the price for new homes increased 12.7 percent to $246,950. Thirdquarter data from the New Hampshire Association of REALTORS^® for the Seacoast Region and the Strafford County areas combined indicate that total sales were almost the same for the third quarter in both 2000 and 2001, but average sales price was up 8 percent to $213,200. OFHEO indicates that homeprice appreciation in the Portsmouth-Rochester area has averaged approximately 12 percent annually over the past 5 years.