The economy in the Mid-Atlantic region as of the third quarter of 1998 had recorded moderate gains in employment and a decline in the unemployment rate. During the 12 months ending in September, nonfarm employment in the region increased by 1.5 percent, or 193,800 jobs, to 12,866,200 jobs. The unemployment rate during the period declined from 4.9 to 4.3 percent. Delaware and Virginia reported the largest employment growth, 3 and 2.9 percent, respectively.

Employment growth in Virginia during the 12 months ending in September accounted for almost half of the job gain in the region. All sectors recorded increases. Services gained 50,800 jobs as a result of continued rapid expansions in high-technology and telecommunications industries. Construction employment also showed strong gains of close to 12,000 additional jobs due to increased commercial and residential activity. The main force behind the strong growth is the Northern Virginia suburbs of the Washington, D.C., metropolitan area. Nonfarm employment in Northern Virginia increased by 4.7 percent, or 47,400 new jobs, in the past 12 months alone, accounting for more than half of the job growth in the State.

Employment in the Charleston, West Virginia, area grew 2.3 percent from September 1997 to September 1998. In the Huntington area, telemarketing and call centers are a rapidly expanding source of employment. A number of com- panies have announced plans for teleservice call centers that will employ more than 1,500 persons. In the booming Eastern Panhandle of the State, employers have experienced difficulties because of the small available labor pool. Competition will become even stiffer when aircraft manufacturer Sino Swearingen, fiberglass maker Guardian Industries, and catalog printing company Quad Graphics begin hiring in 1999.

Residential redevelopment in inner-city neighborhoods is occurring throughout the region. In Washington, D.C., groundbreaking is set for a 156-unit development in the historic Shaw area near Howard University. Sales prices start at $80,000, and one-third of the units already have been presold. In Richmond, a nonprofit community development organization working to provide affordable housing has recently received approval to build six homes in the historic Oregon Hill neighborhood near downtown. The sales prices for the homes are expected to be about $90,000. In Baltimore, a major redevelopment effort will focus on the Westside Development Area just north of Camden Yards. The plan calls for about $500 million in private funds and $28 million in government funds for projects over the next 9 years. The largest single project will involve $350 million to convert four blocks of underutilized buildings into more than 2,000 residential units and street-level retail and commercial space. Also in downtown Baltimore, the Downtown Housing Council plans to convert up to 18 buildings in the central business district into housing.

The annual rate of existing home sales in the Mid-Atlantic region as of the second quarter of 1998 was up 15 percent from second-quarter 1997. In Virginia, existing home sales in the first 9 months of 1998 totaled 46,797, up 35 percent over the same period in 1997 according to the Virginia Association of REALTORS^®. In the Washington metropolitan area, sales of existing homes during the first 9 months of 1998 were up 27 percent to 49,665, compared with the same period a year ago. Sales in the Northern Virginia suburbs were up almost 40 percent over a very strong 1997. The hot market has reduced the inventory of available homes to the lowest level of the 1990s. New home sales for the Washington area through September also showed a healthy increase over 1997 volume. Sales for the first 9 months totaled 22,830 homes, up 10 percent, according to Meyer's Housing Data Reports. Activity in the Maryland and Virginia suburbs was up 8 and 13 percent, respectively. In Arlington/Alexandria sales totaled 1,008, a 65-percent increase.

Through the third quarter, single-family building permit activity in the Mid-Atlantic region had increased to 80,789 homes, a 10-percent rise over the same period in 1997. All States reported gains. Maryland issued permits for 18,622 homes, a 14-percent increase, and Virginia was up 9 percent to 30,160 homes. Except for the Baltimore area, where activity was down 7.8 percent, the region's other major markets saw healthy increases. The Washington, D.C., metropolitan area recorded the largest gain: 23 percent.

Manufactured housing is an important source of homeownership in the Mid-Atlantic region, particularly in the region's rural areas. The importance of manufactured housing as a source of new homes can be seen in West Virginia, where shipments totaled 3,060 units in the first 8 months of 1998, compared with 2,140 single-family building permits issued during the same period for new home construction.

Demand for condominiums and strong rental market conditions in the region's major metropolitan areas have kept multifamily housing activity at high levels during 1998. In the first 9 months of 1998, permits were issued for 18,449 units, 3 percent over a very active first 9 months of 1997. Activity in Maryland, 5,400 units, was double the level for this time last year. In the Baltimore area, multifamily activity for the first three quarters totaled 2,652 units, double the number of units permitted in all of 1997, which will make 1998 the best year since 1990. In the Washington metropolitan area, multifamily permit activity during the first 9 months of the year totaled 6,833 units, an 84-percent increase compared with the first 9 months of 1997. Activity in Pennsylvania declined significantly, by 37 percent, during the same period. The decline reflects the large pipeline of projects now under development that were issued building permits in 1997 and 1996, especially in the Philadelphia area.

Spotlight on Pittsburgh, Pennsylvania

Employment growth in the Pittsburgh metropolitan area has slowed. Nonagricultural employment as of August 1998 was 1,065,700, just 0.3 percent above August 1997. The unemployment rate for August was 4.1 percent. To help spur the local economy, the State has pledged $40 million to fund 16 key development projects to create or retain approximately 21,000 jobs over the next 10 years. The projects include development of the Airside Business Park and Cargo Center and redevelopment of the former Alcoa Building into the Regional Resource Center. Also, $800 million in State, local, and private funds will be used for major developments in the Pittsburgh area. In the past year, the State has pledged more than $500 million to the area for capital improvements, including $150 million for the convention center; $38 million for the University of Pittsburgh Convocation Center; and $338 million for the Mon/Fayette Expressway, Southern Beltway, and Findlay Connector. Included in the total are the expansion of the convention center as well as construction of PNC Park for the Pirates baseball team and a new stadium for the Steelers football team.

Significant private-sector investment is occurring in the city. Mellon Bank and PNC have both broken ground on corporate operation centers with planned costs of $100 million each. Lord & Taylor announced plans for a $36 million store to open in 2000. National Gypsum and U.S. Gypsum have each broken ground on wallboard manufacturing plants in Beaver County, investing a total of $210 million. The success of Robinson Town Center shopping center has spawned additional retail growth in the Parkway West corridor. A stand-alone Kaufmann's department store recently opened near the shopping center, and plans are under way to build a mall on the site. Retailers filled more than 1.3 million square feet of space in this part of the Pittsburgh area in the past year.

Residential construction in the six-county Pittsburgh area remains strong. Building permit volume in 1997 was the third highest of the 1990s, and activity for the first 9 months of 1998 was up 6 percent for single-family and 18 percent for multifamily from 1997's levels for the same period. Through September, permits were issued for 3,719 single-family homes and 1,283 multifamily housing units.

Home sales were also very strong in the first 8 months of 1998. Through August, 13,722 houses were sold, up 8 percent from last year. In August alone, home sales totaled 2,043, a 9-percent increase over August 1997. The average sales price rose 3.2 percent to $116,000. First-time buyers dominate the existing home market, and demand has increased in the city of Pittsburgh. The sales markets in former steel mill towns are softer, and older, less-expensive homes remain on the market for extended periods. Overall, demand is strongest for mid-priced homes in the $75,000 to $120,000 range. In Butler County and Cranberry Township, the market has been particularly hot, with high sales activity in new homes aimed at move-up buyers and transferees. Move-up buyers are targeting the $130,000 to $175,000 homes. Loft conversion projects, both rentals and condominiums, are being successfully absorbed in the city. Condominium prices in the Downtown and Strip Districts range from $90,000 to $200,000.

Multifamily housing activity in recent years has been confined to large, high-rent complexes and to elderly independent- and assisted-living facilities. In the seniors housing market, the number of licensed personal-care beds increased 12 percent in the past 12 months to more than 16,700 in the metropolitan area and almost 8,000 in Allegheny County. As a result, this market has softened and lease-up periods have been much longer than expected. The competitive conditions are expected to continue for some time.

Three large apartment complexes with a total of 1,058 units are under construction in suburban Allegheny County. Rents are in the upper level for the area, ranging from $700 for a one-bedroom unit to $1,400 for a three-bedroom unit. Several other apartment developments are also in the planning stage in the county. The first phase of a 559-unit rental complex is under construction in Butler County. The city of Pittsburgh is also beginning to attract the attention of developers interested in infill projects; loft conversions; and rehabilitation of smaller, older projects.