Employment growth in the region slowed to less than 1 percent in the 12 months ending February 2001. Business services, trade, and construction accounted for 70 percent of the 190,000 new jobs. The unemployment rate in the region stood at 4.1 percent as of February 2001, up from 3.8 percent in February 2000.

In the Chicago area, the construction industry is expected to be very robust in 2001. The $3 billion expansion of O'Hare Airport will begin later this year. American Trans Air plans to build a $100 million training and operations center, which is expected to add 2,500 new jobs in the area by 2004, near Midway Airport. In south suburban Will County, the $2 billion construction of Deer Run Industrial Park on part of the former U.S. Army Joliet Arsenal will be one of the largest economic development projects in Illinois and will add an estimated 20,000 construction jobs and 8,000 permanent jobs in the Joliet area over the next 7 years. Sources recently reported strong preleasing activity in the new industrial park. To date, approximately half of the 17 million square feet of industrial space has been leased.

In the first 3 months of 2001, existing home sales in the region maintained a strong pace. The Ohio Association of REALTORS^® reported that 20,900 existing homes were sold in the State through March, nearly identical to the volume for the first 3 months of 2000. Existing home sales in Cincinnati, Cleveland, and Columbus followed the same trend. In Illinois, existing sales activity in the first quarter of 2001 was also equal to last year's pace for the same period, while the median sales price was up 6 percent to $135,500. The Michigan Association of REALTORS^® reported that activity was mixed in the State's major metropolitan areas. In the Detroit-Ann Arbor area, existing home sales were down 6 percent for the first 3 months of 2001, but existing home sales in the healthy Grand Rapids' economy increased 12 percent.

In 2000, single-family building permits were issued for 194,000 units in the Midwest, the third-highest annual level in the past 20 years. Home construction in the region continued to be strong in the first 3 months of 2001. Permits were issued for 38,587 single-family homes through March, down 4 percent compared with the first quarter of 2000. The Building Industry Association of Southeast Michigan reported that Detroit area builders are more cautious in 2001 due to the national slowdown in automobile sales. Single-family permit activity in the area was down 20 percent in the first quarter to 3,871 homes. Indianapolis' sales market for new homes was hotter than normal in the first quarter of 2001 due to low interest rates, according to local builders. Single-family construction activity in the metropolitan area increased 16 percent to 3,257 homes.

The Wisconsin Builders Association reported that 21,000 new single-family homes started construction in the State in 2000, one of the best years for home construction since the late 1970s. Fueled by increased demand from empty nesters and professional couples, condominium development activity in downtown Milwaukee has been very active for the past 3 years, with 20 new projects worth $170 million completed, under construction, or planned for the area.

Chicago Title and Trust Company reported that sales of new and existing homes in 2000 remained strong for the third straight year. Approximately 170,000 homes were sold in the metropolitan area, down 2 percent from a very good 1999. The Chicago Association of REALTORS^® reported existing home sales in the first 3 months of 2001 equaled the strong sales activity in the area during the first 3 months of 2000. In suburban Lake County, mortgage applications for the first 2 months of 2001 tripled the volume for the same period in 2000. Reflecting the first increase in its population in 50 years, Chicago's hot market saw a record 33,600 new and existing home sales in 2000. Continued strong demand for housing in the first quarter of 2001 prompted the city to boost its commitment to affordable housing by $100 million over the next 3 years; this is expected to add another 1,000 units to the $1.3 billion program.

Multifamily building permit activity in the Midwest region was down 12 percent for the first 3 months of 2001, to 8,577 units. In Illinois, activity for the period was on pace with last year due to a substantial increase in the Chicago metropolitan area. Approximately 7,000 new apartment units are expected to enter the Chicago suburban market during the next 2 years compared with 5,000 units between 1999 and 2000. The rental market in the western suburbs has begun to soften due to employment reductions in the area and increased tenant move-outs to new homes. In the Aurora-Naperville area, absorption of new units slowed from 2000, and rental concessions were more widespread.

In the Indianapolis area, apartment vacancy rates increased in 2000 to 9.7 percent in large properties of 100 or more units compared with 7.6 percent in 1999. CB Richard Ellis reported that fewer apartment projects are in the pipeline for completion in 2001, which should allow vacancies to decline over the next 12 months. In the Detroit-Ann Arbor area, 3,300 new apartments were absorbed in 2000, the highest level since 1997. Marcus and Millichap's first-quarter 2001 Apartment Research Report expects that continued strong demand for rental housing will keep the vacancy rate at 4 percent or less.

Ohio continued to see mixed conditions among the State's largest apartment markets. Columbus-area apartment vacancy rates have increased during the past 2 years as 7,000 new rental units have come on the market. The Danter Company reported vacancy rates in the 6- to 7-percent range as of the first quarter of 2001. Multifamily permit activity in the Cincinnati-Hamilton area during the 12 months ending March 2001 declined significantly as developers responded to the large volume of units entering the pipeline since 1998. An estimated 3,000 new units are expected to come on the market in 2001.

Spotlight on Minneapolis-St. Paul, Minnesota-Wisconsin

Stimulated by a growing local economy, the population in the Minneapolis-St. Paul area increased 16 percent from 1990 to 2000 to almost 3 million people. Nonagricultural employment increased 1.6 percent, or 27,900 jobs, in the 12 months ending February 2001 compared with 0.8 percent for the Midwest region overall. The unemployment rate was 2.7 percent in February, essentially unchanged from a year earlier. The Twin Cities economy is expected to continue to grow throughout 2001 based on several signs. General Mills has announced plans to add space for another 1,700 workers to its campus in Golden Valley by consolidating some operations and allowing for expansion, and Ryan Companies is planning the development of more than 200 acres for warehouse, high-technology, and office space in Shakopee, a fast-growing southwestern suburb. In Richfield, the Best Buy Company plans to consolidate operations in new facilities that will include 9,500 employees.

The sales market for existing homes for 2001 is expected to be as strong as that of 2000, according to several local sources. The Minneapolis Area Association of REALTORS^® reported that first-quarter sales of existing homes were 9 percent greater than during the same period in 2000, and the median sales price was $159,900. The market is especially strong for entry-level homes, which are in the $120,000-to-$150,000 range. Existing home sales in the metropolitan area in 2000 totaled 45,000 homes, the same volume as in 1999. The U.S. Department of Housing and Urban Development's (HUD's) Federal Housing Administration (FHA) is a significant part of the sales market in the Twin Cities area. In 1999 and 2000, FHA single-family mortgage insurance endorsements totaled 27,555 homes, or more than 30 percent of all existing home sales. In the first 3 months of 2001, 3,086 FHA home mortgages were endorsed, a 22-percent increase over the 2,531 homes a year earlier.

Minneapolis-St. Paul's robust economy has supported high levels of residential construction for the past several years. In 2000, single-family building permits were issued for 23,173 homes, an 11-percent increase over 1999's 20,884 homes. Blaine, Lakeville, Maple Grove, Shakopee, and Woodbury have been particularly active communities.

Multifamily building permit activity in 2000 was up 23 percent to 4,800 units compared with 3,900 units in 1999. Less than 40 percent of the activity in 1999 and 2000 was attributable to general occupancy rental housing. Condominium developments and age-restricted rental developments for seniors comprised more than 60 percent of multifamily activity. HUD's FHA is active in rental housing development. The FHA insured mortgages on 1,121 rental units completed in 2000, 236 units completed during the first quarter of 2001, and 1,448 units currently under construction.

The rental market remains tight. The overall vacancy rate in the area's apartment developments was estimated at 2 percent as of March 2001. All levels of government have been exploring ways to foster additional affordable housing, particularly rental housing. The city of Minneapolis requires city-assisted rental developments to include affordable units for families and has set a target of producing 2,110 affordable units by the end of 2002. The city of St. Paul is involved in 4 projects totaling 2,500 units in planning stages that are mostly near the downtown area, and a 114-unit rental development in downtown that is already under construction.

In the Southwest region, growth in nonagricultural wage and salary employment averaged 2.7 percent during the 12-month period ending February 2001.