During the past 12 months, the economy in the Northwest region has slowed significantly. Nonagricultural wage and salary employment declined by 0.5 percent, or 32,000 jobs, during the 12 months ending March 2002 compared with a 2.4-percent gain for the same period in 2001. Alaska remained steady and led the region with a 1.7-percent growth rate resulting from gains in government (State, local, and tribal), retail trade, and health services employment. In Idaho, employment growth measured 1.1 percent for the 12 months ending March 2002, a slowdown from the year-earlier period, when growth reached more than 4 percent. Losses in the manufacturing sector were the main reason for slower growth. The services; finance, insurance, and real estate; and government sectors were Idaho’s bright spots.

Growth in Alaska and Idaho was not enough to offset the combined losses in Washington and Oregon of 43,000 jobs, or declines of 0.7 percent and 1.4 percent, respectively. Losses in Washington occurred in nearly every major sector, with the only exceptions being the government and finance, insurance, and real estate sectors. In the Puget Sound region, Boeing layoffs totaled just under 12,000 as of March 2002, with another 3,900 layoffs expected by June 2002.

The unemployment rate in the region averaged 6.4 percent for the 12 months ending March 2002, up from 5.0 percent for the same period in 2001. Unemployment rates were highest in Oregon, 6.8 percent, and Washington, 6.5 percent. Idaho recorded the lowest unemployment rate in the region at 5.2 percent, and Alaska was the only State to record a decline during the past year, from 6.3 percent in 2001 to 6.0 percent in the current period.

Low mortgage interest rates kept sales housing markets throughout the region healthy. Existing home sales for major markets in Oregon recorded a 5.1- percent increase for the first 3 months of 2002 compared with the same period in 2001. In the Portland metropolitan area, sales were up 2 percent, and the median sales price rose 2.3 percent to $169,000. In the Boise, Idaho, metropolitan area, existing home sales rose 2.4 percent and the median sales price appreciated 3.9 percent to $124,600.

Existing home sales activity in the Seattle metropolitan area totaled 7,285 homes, up 6 percent through March 2002 compared with the same period in 2001, according to the Northwest Multiple Listing Service. The median sales price rose an estimated 5 percent to $253,000 over the past 12 months as of March 2002. Existing homes sales rose 7.8 percent in the Tacoma area and 11.4 percent in the Olympia area for the first 3 months of 2002 compared with the first quarter of 2001. Existing condominium sales rose a modest 3 percent in the Seattle metropolitan area but picked up in the Tacoma area, up 15 percent; the Bremerton area, up 67 percent; and the Olympia area, up 62 percent. Developers of newly constructed condominiums in the Seattle metropolitan area were struggling with an oversupply of units in the $300,000 and over price range; sales at all prices were down 11 percent through March.

Single-family building permit activity continued to keep pace with the sales market activity in the region, although levels were slightly below year-earlier figures. Permits were issued for 12,860 homes year-to-date through March 2002, a 3-percent decrease. In the Puget Sound area (Bremerton, Seattle-Everett, and Tacoma), building permit activity declined 6 percent to 3,742 homes. In the Portland-Vancouver metropolitan area, activity for the year dropped 2 percent to 2,692 homes.

Rental markets in the Northwest remained strong, although some markets reflected the effects of job losses, slower population growth, new construction, and low mortgage interest rates. In the Portland- Vancouver area, the slowing economy has pushed vacancies to 6.5 percent, up from 6 percent last quarter and 5 percent in the first quarter of 2001. The Eugene-Springfield rental market remained tight, as was the Central Oregon market in the Bend area, whereas balanced conditions prevailed in the Salem and Ashland-Medford market areas. Central and southwest Idaho markets were experiencing increased vacancy rates and soft market conditions, especially in Lewiston and the Boise metropolitan area. The average vacancy rate in Boise measured 9.2 percent as of the first quarter of 2002 compared with 4.5 percent in the first quarter a year ago. The remainder of Idaho’s rental markets remained tight to balanced.

In the Puget Sound area, rental vacancy rates continued to increase in the first quarter. Vacancies in the Seattle metropolitan area have risen to 8.2 percent as of March 2002, up from 7 percent in December 2001 and 3.9 percent a year ago, according to the Dupre+Scott Apartment Vacancy Report (Spring 2002). Approximately 65 percent of the properties surveyed by Dupre+Scott were offering concessions in King and Snohomish Counties to help reduce vacancies. Dupre+Scott projects that vacancies will reach 9 percent by the end of 2002 in the Tri-County Region (Seattle and Tacoma areas) and decline slowly thereafter, reaching a balanced rate of 5 to 6 percent by the end of 2004. Other Puget Sound markets, including the Tacoma, Olympia, and Bellingham areas, have experienced modest increases in vacancies over the past year and moved from tight to balanced market conditions. The Bremerton area was the only Puget Sound market to tighten over the past year; vacancies averaged 3.1 percent as of March 2002 compared with 4.4 percent in March 2001.

The Tri-Cities rental market in Eastern Washington was hot because of the rapidly expanding employment related to Hanford; the current boom cycle is projected to last until 2007, creating demand for additional rental units. The Spokane metropolitan area rental market was generally balanced with vacancies averaging 5.5 percent overall.

Multifamily building permit activity in the Northwest region during the first 3 months of 2002 totaled 3,146 units, a 29-percent decrease compared with the first quarter of 2001. Activity in the Seattle- Everett area fell 54 percent to 803 units with the weakening demand for newly constructed apartments and condominiums. In the Portland area, multifamily activity remained steady compared with year-earlier levels at 759 units.