Employment gains in the Mid-Atlantic region for the 12 months ending in August 1997 were the highest level of the 1990s. Gains by the States in the region ranged from 2 to 3 percent. The unemployment rate in Pennsylvania in August 1997 rose slightly to 5.1 percent compared with 4.9 percent 1 year earlier. In the other Mid-Atlantic States and the District of Columbia, unemployment was down in August 1997 compared with 1996.

Employment in both the Baltimore and Philadelphia metropolitan areas is growing by 1.3 percent annually, and the Washington, D.C. metropolitan area's economy is expanding by nearly 2 percent. The unemployment rate in the Baltimore and Philadelphia areas is holding steady at 5 percent.

The lowest unemployment rate in the region's major metropolitan areas was in the Washington, D.C. area, with a rate of 3.4 percent as of August 1997. The Northern Virginia part of the Washington, D.C. metropolitan area continues to lead the area in job gains, fueled by expansions in high-technology industries, business services, and retail trade. The addition of more than 33,000 jobs over the past 12 months in Northern Virginia -- a 3.4-percent gain -- is more than double that of the Maryland suburbs, where 15,300 jobs were added.

Accelerated job gains in both the Washington, D.C. metropolitan area's Virginia and Maryland suburbs are stimulating the sales housing market as well. According to the Virginia Association of REALTORS^®, existing home sales in Northern Virginia for 1997 (through August) were up 63 percent over the same period for 1996. In the close-in suburbs of Alexandria, Arlington, and Fairfax, resales through August 1997 were 78 percent ahead of the same period last year. Sales of new and existing homes in the Washington, D.C. metropolitan area are expected to be strong for the remainder of the year, making 1997 the best year of the 1990s.

Existing home sales are up slightly (2 percent) in the Baltimore area this year, led by Howard County's 11-percent gain. New home sales are also strong in Anne Arundel County and Howard County. Townhouse sales are down in 1997 compared with 1996, particularly in Baltimore County.

Mid-Atlantic single-family building permit activity through September 1997 totalled 73,591 units -- a slight 3-percent drop, with all States showing declines. In the Baltimore area, activity was down 7 percent to 6,803 units, while single-family activity in the Philadelphia area was up 4.7 percent to 9,736 units. In the Washington, D.C. metropolitan area, single-family permits totalled 18,001, with Northern Virginia activity up 3 percent and Maryland reporting a slight decline.

Home production is stable in Richmond. Greater builder interest is being directed to move up homes for those nearing retirement. New ranch-style houses on small lots are increasingly popular with empty nesters. Two developments of fourplex condominiums in the north Richmond area have sold very quickly. The two- and three-bedroom units with attached garages and patios or verandas were priced at $150,000, with monthly community fees and maintenance charges of less than $200.

Other Virginia builders are marketing small-town settings in planned communities. In Chesterfield County a 670-unit community offers sidewalks, a skating rink, a fishing pond, and street lights, as well as a town center. Prices are primarily in the $180,000 to $250,000 range. On the fringes of both the Hampton Roads and Richmond areas, the 5,700-acre Stonehouse new town in James City County is emphasizing neighborhoods and preservation of natural settings. Construction has recently started on the 1,000-acre first phase consisting of 800 homes. Lots are available at about $45,000, with new homes priced at $180,000 and up.

Multifamily building permit activity through September 1997 in the Mid-Atlantic region (17,930 units) was up in all States except Virginia. The drop in Virginia was in response to the large pipeline of more than 19,000 units permitted in 1995 and 1996. Of the 5,400 market-rate apartments now under construction in the Washington, D.C. metropolitan area, 83 percent of the activity is in Northern Virginia. In the region's major markets, condominiums are an increasing share of the multifamily production in 1997.

Rental market conditions in the Mid-Atlantic's major market areas have remained balanced this year. Absorption of new units in the Washington, D.C. metropolitan area suburbs has been very good. In the Philadelphia area, the number of multifamily units permitted more than doubled this year to nearly 2,900 units, reflecting strong rental demand in both suburban and Center City submarkets.

Spotlight on Pittsburgh, Pennsylvania

Nonagricultural wage and salary employment increased by 7,000 jobs in the 12 months ending in August 1997. This is an improvement over last year's increase of 5,400 jobs for the comparable period. The 1997 gains were led by increases in the service and financial sectors, which are expanding by 2 percent per year. The unemployment rate was 4.8 percent in August.

Population shifts within the six-county metropolitan area continued, despite an absence of overall growth since 1990. The loss of population from Allegheny County is being mitigated by programs to attract startup businesses to the city, with business loans financed by city and Western Pennsylvania Adventure Capital Fund contributions. A 2-year property tax abatement program for homebuyers has been activated in the county.

Development of office and mixed-use projects is at the highest level of the 1990s in Allegheny County. At least eight major office construction projects are under way by the area's larger employers. Construction has started on a $12 million business park at the Pittsburgh International Airport. Successful mixed-use redevelopment projects are drawing suburban residents back to city neighborhoods in Pittsburgh. Redevelopment of the LTV site into a mixed-use project of 300 housing units, 500,000 square feet of retail space, and 1.5 million square feet of offices has begun. Successful conversions of warehouses to condominium use are tapping the strong demand for units in South Side neighborhoods and in the Strip District, a riverside area that was previously an open-market district. Most projects are less than 50 units, with prices ranging from $90,000 to a high of $270,000.

The redevelopment of the brownfields site on Washington's Landing -- a former industrial site on an island in the Allegheny River -- into a 5-phase, 89-unit luxury townhouse development is exceeding projections. Three phases are complete and the fourth phase of 23 units is to be sold by lottery due to strong demand. Prices range from $153,000 to more than $300,000 for the 1,200- to 2,600-square-foot townhouses.

Existing home sales in the metropolitan area were up 3 percent in the first 8 months of 1997 in comparison with the same period in 1996. Single-family building permits were down 6 percent to 3,515 units through September 1997. An increasing share of production was concentrated in outlying counties, particularly Butler and Westmoreland. Prices for new homes are primarily in the $130,000 to $280,000 range. Smaller subdivisions of 50 to 150 lots are typical.

The apartment vacancy rate in the Pittsburgh area is estimated to be about 3 percent. Multifamily permit activity through September 1997 totalled 1,090 units, the highest volume of the 1990s. Both condominium and apartment construction increased. One of the largest new apartment developments in the area is the 232-unit Lincoln at North Shore complex on the north side of Pittsburgh. The first 145 units are completed, and nearly 90 percent of the units have been leased at rents of $650 for one-bedroom units and up to $1,500 for the premier two-bedroom units. The 87-unit second phase is under construction, with nearly one-third of the units preleased. The Armstrong Cork warehouse conversion in the Strip District will include 317 upscale riverside apartments as well as restaurants and retail space.