During the 12 months ending February 2003 average nonfarm employment in the Mid-Atlantic region declined by 30,350 jobs, or just under 0.3 percent, to approximately 13.4 million. Only Maryland, bolstered by counties in the Washington metropolitan area and the District of Columbia, recorded slight gains over the 12-month period ending February 2003. Delaware recorded the largest decrease for the 12-month period—approximately 1.5 percent—because growth in the leisure and hospitality and trade sectors was not sufficient to offset losses in the manufacturing; finance, insurance, and real estate; and government sectors. Both the District of Columbia and the Newport News-Norfolk metropolitan area reported gains in nonfarm employment, the latter area because of increased defense contracting.

The unemployment rate for the Mid-Atlantic region was 5 percent during the 12 months ending February 2003, up from 4.4 percent during the same period in 2002. The unemployment rate remained stable in the District of Columbia but rose in all of the states in the region with West Virginia recording the highest rate, 6.1 percent. The Philadelphia metropolitan area unemployment rate continued to increase because of the continued loss of manufacturing jobs. The 5.4-percent rate for the 12-month period was a significant increase from the 4.5 percent reported a year earlier.

Demand continued to be strong for new housing. The number of single-family units authorized for building permits for the 12 months ending March 2003 totaled approximately 122,580 for the region, an increase of 7 percent over the comparable 12-month period ending in 2002. Available land and favorable tax policies continued to attract buyers to Delaware with permits issued for approximately 6,670 single-family units in the 12 months ending March 2003, a 36-percent increase over the comparable period a year earlier. Permit activity may slow during the remainder of this year as communities begin to adopt the state plan for regulating growth. The District of Columbia also continued to produce single-family housing at record highs; permits were issued for 375 homes during the 12-month period ending February 2003.

Existing home sales in the Mid-Atlantic region remained strong but there is evidence of a slowdown. The Virginia Association of REALTORS^® reports that existing home sales for the 12 months ending February 2003 totaled 112,460 homes, up 7 percent over the previous 12-month period ending February 2002. However, the number of homes sold during the 12 months ending December 2002 was 11 percent above the same period in 2001. Although this slowdown has been attributed to increased unemployment, anxiety about the war in the Iraq, and the severe winter that curtailed movement in the market, the continued rise in sale prices suggests that a decrease in supply is the primary cause. Sales in the Richmond metropolitan area continued to outpace past years. Sales during the 12 months ending February 2003 exceeded the previous period by 10 percent. Sales in the Northern Virginia area were 7 percent above the previous 12-month period. The median sales price for Northern Virginia, $276,700, was the highest in the region and 10 percent greater than the price recorded 12 months earlier.

The Maryland Association of REALTORS^® reports a 3.6-percent increase in sales for the 12-month period ending March 2003 over the same period in 2002, a slight decline compared with the 4-percent increase from 2001 to 2002. In Maryland the median sales price of an existing home rose 15 percent to $177,900, indicating continued strong demand and a tightening supply of homes for sale. In the Baltimore metropolitan area the pace of homes sales continued to lag behind the state with sales for the 12 months ending March 2003, 2 percent lower than a year earlier.

Apartment construction in the Mid-Atlantic region as measured by multifamily building permit activity totaled approximately 30,730 units during the 12 months ending March 2003, 5.8 percent above the same period a year earlier. Virginia remains the only state reporting significant gains: 12 percent compared with the same period ending March 2002. During the 12-month period ending March 2003 the Richmond and Norfolk-Newport News-Virginia Beach metropolitan areas, together with Northern Virginia, accounted for approximately 10,000 multifamily units, or 80 percent of the multifamily permit activity in the state.

The apartment markets in the region’s largest metropolitan areas have loosened compared with their very tight market conditions of the past several years. According to Delta Associates concessions in the Maryland and Northern Virginia submarkets of the Washington metropolitan area for Class A rental space are common, and vacancies range from 3.5 to 3.7 percent. The vacancy rate in the District is higher, 5.7 percent, with more than 4,200 units under construction. The vacancy rate in Class A properties in the Baltimore metropolitan area has increased to 3.5 percent, according to Delta Associates, and Class A vacancies in the city’s downtown submarket have almost doubled in the past year to an estimated 4.7 percent, with approximately 1,400 units in the pipeline. Class A vacancies in the Philadelphia metropolitan area garden apartment market have increased and range from 3.5 to 4 percent in the market’s suburban counties. An extensive pipeline of 5,300 units is in the planning stages, but developers may choose to delay some of those potential projects. In Philadelphia’s Center City, vacancies in Class A highrise properties are estimated to have doubled to 3.2 percent. The absorption rate for recently completed developments in Center City has dropped to 8 units per month. The pipeline has decreased, but at 2,000 units, it is still a substantial number for the city.