The economies in most of the Rocky Mountain states improved during the first quarter of 2003. Layoffs have slowed, and total employment has leveled off. After a rocky start in much of the region, winter tourism picked up after the beginning of the year. Drought worries persist but spring snowfall has brought the region’s snowpack close to normal. Airlines and telecommunications firms are still laying off workers but the worst appears to be over. Average nonfarm employment in the region for the 12 months ending February 2003 was down from 1 year ago, but the 0.7-percent unemployment rate for this period was smaller than the 1–1.2 percent that was typical of the second half of 2002. Montana remains the bright spot in the region with an average 1-percent growth rate in employment. Average job totals in North and South Dakota were changed little from 1 year ago. Wyoming’s growth has slowed but remained positive. Colorado’s average 1.4-percent decline for the 12 months ending February 2003 was the largest drop among the Rocky Mountain states but was a significant improvement from declines of more than 2 percent last fall. Utah’s decline in employment has been smaller than Colorado’s, but the annual rate remains mired in a narrow 0.8- to 0.9-percent range.

Low unemployment rates still dominate most of the region. As of February 2003 rates in North and South Dakota remain below 4 percent, and Montana’s and Wyoming’s rates (4.0 and 4.1 percent, respectively) followed closely. Rates of 5.5 percent in Colorado and 5.3 percent in Utah are closer to, but still below, the national average.

Total residential building activity for the first 3 months of 2003 is off last year’s pace. Single-family activity was changed little, but multifamily permits were down 14 percent. A long-overdue cutback in apartment construction in Colorado’s Front Range, along with little activity in markets outside the Front Range, offset gains in most of the remaining states in the region. Increasing apartment and condominium construction is reported in Provo, Missoula, and Sioux Falls, but major cutbacks are evident in Colorado Springs and Denver. Single-family building permit activity was up in all states except Colorado, also a result of the Front Range markets’ slowdown.

Conditions in rental markets throughout the region have softened because the increase in rental units of the past 24 months has been met by lukewarm demand, a result of the job losses in most major markets. The Apartment Association of Metro Denver’s fourth-quarter 2002 vacancy survey reports an 11.7-percent apartment vacancy rate, the highest level since the first quarter of 1990. With 7,000–8,000 units still under construction and employment declining, the rate is forecast to increase during 2003. The Colorado Division of Housing’s survey of other rental markets in the state as of February 2003 shows softer conditions in most other markets as well. Rental markets in most mountain areas remain firm, but several areas have weakened. The 19.6-percent rate cited for Loveland was the highest in the survey, and the 1.7-percent rate for Gunnison was the lowest. In the Dakotas conditions in the Fargo-Moorhead and Sioux Falls rental markets have also softened. A survey by Appraisal Services, Inc., of apartments in the Fargo-Moorhead area shows a first-quarter 2003 vacancy rate of 6.3 percent, the highest first-quarter rate in 6 years. A survey conducted by the South Dakota Multi-Housing Association in January 2003 shows a vacancy rate in Sioux Falls of 8.8 percent—the highest in 6 years—dimming the market prospects for a surge in multifamily construction during the first quarter of 2003. The scheduled post-Olympic recovery in the Salt Lake rental market has failed to appear as anticipated, and a report by Hendricks & Partners cites a rental vacancy rate of 7.6 percent in the fourth quarter of 2002.

Sales markets remained active in the fourth quarter of 2002. The NATIONAL ASSOCIATION OF REALTORS^® reports that the annual rate of existing home sales dipped in Colorado during this quarter, while the remaining Rocky Mountain states posted gains or held steady. Utah’s annual rate was almost 16 percent ahead of the rate of 2001’s fourth quarter. Colorado sales activity as of the fourth quarter of 2002 was 2 percent greater than the fourth quarter of 2001. Sales price gains have slowed in most states. OFHEO price index data for the fourth quarter of 2002 indicate that annual increases in Montana and Wyoming are holding steady at approximately 6 percent. In contrast, Colorado’s annual change has dropped to close to 4 percent, down from more than 10 percent in early 2001. Utah’s fourth-quarter gain slowed to less than 2 percent, the smallest in the nation. North and South Dakota price increases are down to slightly more than 4 percent from around 6 percent in early 2001. Delinquency and foreclosure rates were up slightly in the fourth quarter of 2002, but rates in all states except Utah remain below the national averages.