The Mid-Atlantic region continued to record modest increases in employment. Nonagricultural wage and salary employment increased by 1.2 percent (162,800 jobs) during the 12-month period ending February 2001, compared with a 1.1-percent increase in 2000. Employment levels rose by more than 2 percent in Delaware, Maryland, and Virginia. Virginia captured more than 42 percent of the new jobs in the region, followed by 31 percent in Maryland. The services sector continued to boost Virginia's economy. Much of the growth in this State remained centered in high-technology businesses and professional services. More than half of new service jobs in Virginia during the 12-month period were located in the Northern Virginia suburbs. As a result, the Washington, D.C. metropolitan area recorded a total job gain of 2.8 percent (73,050 jobs) during the 12-month period ending February 2001.

Labor market conditions grew tighter throughout the Mid-Atlantic region. The unemployment rate was down nearly a full percentage point in West Virginia, to 5.5 percent. As expected, Virginia recorded the lowest rate in the region at 2.4 percent. Among metropolitan areas in Virginia, the unemployment rate was 1.2 percent in Northern Virginia, 2.4 percent in Richmond, and 2.9 percent in Norfolk.

Single-family construction in the Mid-Atlantic region, as measured by building permits, continued a downward pattern into the new year. After declining 4 percent in 2000, total permits issued during the first quarter of 2001 (24,054) were down 0.4 percent compared with the same period a year ago. The volume of activity remained unchanged in Virginia but dropped 8 percent in both Maryland and Pennsylvania. Activity was up 14 percent in Delaware and up 5 percent in West Virginia. Single-family permit activity for the first quarter was down significantly in all of the region's major metropolitan areas except Washington, D.C.

Strong employment conditions and lower interest rates continued to boost existing home sales in Virginia. The Virginia Association of REALTORS^® reported that more than 92,300 homes were sold in 2000, an 8-percent increase over 1999 volume. The pace accelerated during the first 2 months of 2001 with sales of 13,886 existing homes, up 17 percent compared with the first 2 months of 2000; the median sales price was $128,600. Despite a drop in the inventory of homes for sale, the market is expected to be even stronger during the spring in light of strong demand and lower interest rates.

The demand for sales housing in Maryland remained at robust levels during the first quarter of 2001. The Maryland Association of REALTORS^® reported that sales of existing homes during the first quarter totaled 15,180, a 20-percent increase compared with the first quarter of 2000.

Approximately 70,000 homes were sold in 2000. Baltimore City and Frederick County recorded the largest increases in sales activity for the year, 12 and 10 percent, respectively. The median sales price for the State in 2000, $131,792, remained virtually unchanged from 1999.

Except for Pennsylvania, multifamily housing construction activity increased dramatically in the Mid-Atlantic region. Permits were issued for 6,161 units during the first quarter of 2001, a 32-percent increase compared with the same period last year. Virginia continued to dominate the region with 3,601 units, a 61-percent increase. Activity in Pennsylvania declined 36 percent after experiencing a 16-percent annual increase in 2000. The Philadelphia metropolitan area recorded a 50-percent decline in response to the more than 4,000 units currently in the pipeline.

Mid-Atlantic rental housing markets remained balanced to tight. The rental market in Northern Virginia continues to be the strongest in the region. In Baltimore, market conditions grew even tighter during the first quarter. Apartment vacancy rates of 2 to 3 percent were typical, and rents were up nearly 7 percent over the past 12 months. Since 1995, the Baltimore metropolitan area apartment market has absorbed more than 2,200 new multifamily units annually while maintaining low vacancy rates and balanced-to-tight market conditions. Given the current production pipeline in the metropolitan area, vacancy levels overall are expected to remain at relatively low levels over the next 2 years. The market has become very tight in recent years, especially in the downtown area, as demand for rental units has escalated. The rental vacancy rate in downtown Baltimore is less than 2 percent. An estimated 1,000 rental units currently are under construction in the downtown area. Developers are taking advantage of a 10-year city tax abatement program, which will encourage renovating old commercial buildings into housing in the downtown area. Rents for two-bedroom units in recently renovated buildings start at $900.

Spotlight on Washington, D.C.-Maryland-Virginia

Despite signs of slower growth in the economy nationwide, the Washington, D.C. metropolitan area economy remains strong, supported by the Federal Government and increasingly diverse high-technology and biotechnology industries. Nonagricultural employment increased by 74,000 during the 12-month period ending February 2001, a 2.7-percent increase over the previous year. Unemployment during the period remained at a low 2.3 percent.

The strong local economy has led to significant population growth in the area. The population of the metropolitan area grew by approximately 750,000 people (16 percent) from 1990 to 2000, resulting in more than 300,000 new households in the metropolitan area during the 10-year period.

The population in Northern Virginia grew 25 percent due to its rapidly expanding technology sector. The population of Loudoun County nearly doubled and Prince William County grew by 30 percent as residents took jobs in high-technology and supporting-services industries. In the District of Columbia, the population of the city declined by only 35,000 (6 percent) between 1990 and 2000 as a result of increased demand for in-town living.

Existing home sales in the Washington, D.C. metropolitan area have climbed steadily over the past 5 years, increasing by 91 percent since 1996. Sales in 2000 totaled 93,700 homes, an increase of 9,950 (12 percent) over 1999. In the first quarter of 2001, the inventory of homes for sale reached one of its lowest levels in 10 years. Although homes sales have increased 25 percent during the past 24 months, the available inventory has decreased 50 percent, forcing prices to rise significantly. The median sales price in 2000 reached $187,100, a 6-percent increase over 1999.

New home sales remain very healthy. However, due to constraints on available buildable sites, shortages of skilled labor, and the development process, local builders have substantially increased prices in a number of submarkets. The average base price of new single-family detached homes rose 9 percent to $295,254 during 2000, more than doubling the annual rate of increase during the previous 4 years. (Figures are based on data from Meyers Real Estate Information.) In suburban Maryland and Northern Virginia, new home prices rose 4 percent and 11 percent, respectively, in 2000. Single-family building permits totaled 29,500 units during 2000, an increase of 4 percent over 1999 and the highest annual total of the decade.

Beginning 2 years ago, a significant homebuilding effort got under way in the Anacostia community in Southeast Washington, D.C. As of this report, more than 400 homes (of a planned 1,100) had been completed, 182 were under construction, and contracts were signed on an additional 50 units. Many of the new homeowners are District residents and first-time homebuyers. Typical of these developments is Oxon Creek townhomes, which has experienced strong market demand. The first phase of 113 homes has been sold, and half of the 97 units in the second phase have been sold and are currently under construction. Prices in the second phase range from $110,850 for a three-bedroom, two-bathroom unit without a garage to $142,500 for a three-bedroom, 2.5-bathroom unit with a garage.

The rental market in the Washington metropolitan area remains tight but is expected to become more balanced over the next 2 to 3 years. In 2000, approximately 6,000 new rental units were absorbed in the metropolitan area, the highest level in 12 years, according to Delta Associates. Even with an increased volume of new units, vacancy rates have remained below 2 percent in many markets. In the Washington and Bethesda submarkets in suburban Maryland, apartment vacancy rates in new projects are 1 percent or less, and substantial rent increases are reported. Northern Virginia, in particular, has experienced significant growth in rental housing development. Much of the new development is located near the area's high-technology employ-ment centers.

In 2000, permits were issued for approximately 9,000 multifamily units in the metropolitan area, continuing the near-record pace of 1999. In the first 3 months of 2001, multifamily activity increased 55 percent to 2,790 units. Based on building permit activity and local sources, it is estimated that more than 25,000 new rental units will enter the market during the next 3 years. More than 6,600 of these new rentals are located in the Reston/Herndon/Eastern Loudoun County submarket alone.