The Northwest regional economy continued to record employment declines through the first quarter of 2003. Nonfarm wage and salary employment averaged 5,099,500 for the 12 months ending March 2003, down 0.5 percent compared with the previous 12 months. This decrease represents a significant improvement compared with the annual rate of change for the previous 12-month period, when employment was down 1.1 percent. Both Alaska and Idaho, up 2 and 0.3 percent, respectively, recorded gains due to job growth in education, health services, and government. Employment in Washington declined by 0.75 percent because of losses in the manufacturing sector, more than half of which is attributable to the aerospace sector. Since September 2001 layoffs in Washington at Boeing have surpassed 20,000. Oregon employment was also off during the period, down 0.6 percent, primarily due to declines in the manufacturing sector, which was at its lowest level in 9 years as of the quarter’s end.

Unemployment rates in the region continued to rise. The regional unemployment rate for the 12-month period ending March 2003 was 7.1 percent compared with 6.7 percent during the previous 1-year period. Alaska led the region with a 7.7-percent unemployment rate followed by Oregon and Washington with rates of 7.4 and 7.2 percent, respectively. Idaho maintained the lowest unemployment rate in the region, an average 5.7 percent for the period.

The tepid economic conditions throughout the region did not dampen the strong demand for homes. Housing sales continued to increase throughout the region during the past 12 months primarily due to favorable interest rates. In Washington State’s major markets both sales volume and prices continued to rise. Sales were up 5 percent in both the Seattle and Bremerton metropolitan areas and rose 7 percent in the Tacoma area. The median sales price for the period was $262,000 in the Seattle area and $167,500 in the Bremerton area, both up 5 percent over the previous 12-month period. In the Tacoma area the median sales price increased 14 percent to $171,400.

Idaho and Oregon sales markets also reflected strong demand with a 5.5-percent increase in existing homes sold in the Boise metropolitan area, a 6-percent increase in the Portland area, and a 6.5-percent increase in all other major Oregon market areas. The median sales price in the Portland area rose 6 percent to $178,250. The Boise area continues to have the most affordable homes in the region with a median sales price of $126,200, up 2 percent over the previous 12-month period.

Single-family building activity totaled 15,134 permits year-to-date through March 2003, up 18 percent compared with the first 3 months of 2002 because of the favorable conditions in the region’s sales markets. In the Puget Sound area (Bremerton, Seattle-Everett, and Tacoma) the volume of building permit activity totaled 4,342 homes, 16 percent above 2002’s first quarter.

The Northwest region’s rental markets remained competitive during the first quarter. Reduced inmigration due to slower economic conditions combined with low home mortgage interest rates slowed renter household growth in most market areas. In addition rental projects planned during previously stronger economic conditions continued to enter soft markets regionwide. The Portland area rental vacancy rate rose to 8 percent, up from 6 percent a year ago due to the area’s weak economic conditions. Vacancies in the Boise metropolitan area reached 8.5 percent compared with 7 percent during the first quarter of 2002. Puget Sound area vacancies rose to 7.6 percent compared with 7.4 percent a year ago, according to the Dupre+Scott Apartment Vacancy Report . Submarket areas that experienced small declines in vacancies during the past 12 months, such as East King County, also showed increases in the number of properties offering rental concessions. Nearly two-thirds of multifamily properties in the Puget Sound area were offering rental concessions as of March 2003. Conditions were still stable in the Tacoma and Olympia areas where rental vacancy rates were 6.7 and 4.1 percent, respectively. The Bremerton rental market experienced the most notable increase in vacancies, rising from just 3 percent to 9 percent over the past year because of the rental market’s dependency on U.S. Navy personnel who are currently deployed.

Despite soft market conditions, multifamily permits rose 31 percent in the Northwest Alaska region during the first 3 months of the year compared with the same period in 2002, totaling 4,124 units.