After increasing a marginal 1.7 percent in 2000, nonagricultural employment in the Southwest stalled in 2001. Data revisions revealed less positive results than were first reported. Nonagricultural employment grew by only 0.2 percent, 30,600 jobs, in the 12 months ending March 2002. Losses in the manufacturing sector in all States accounted for the largest downturn, with Texas, which lost more than 47,000 manufacturing jobs, hit especially hard.

The largest job gain was reported in Louisiana, which had 12,300 new jobs, a 0.6-percent increase, whereas Arkansas lost 5,200 jobs, a 0.4-percent decline. The largest percentage growth occurred in New Mexico at 1.3 percent, an increase of 9,700 jobs. Texas created only 5,800 new jobs over the previous 12 months, an increase of less than 0.1 percent. Oklahoma outpaced Texas with 8,000 new jobs, a 0.5-percent annual increase.

Residential building was still very active in the Southwest through the 12 months ending March 2002. Single-family permits totaled 141,814, an increase of 7,144, or 5.3 percent from the same time a year ago. Fourth-quarter 2001 new home closings in the Dallas-Fort Worth area surged 20 percent from 2000 figures, rising from 8,553 to 10,240. Conversely, sales of existing homes dropped 14 percent, the largest year-over-year decline in nearly 2 years, from March 2001 to March 2002. Neighborhoods in North Dallas affected by the slowdown in the high-technology sector showed the greatest declines. Inventory has also increased; the REALTORS^® Multiple Listing Service had 40 percent more listings in March than it had a year ago.

The Oklahoma City Metropolitan Association of REALTORS^® reported a median sales price for existing homes of $90,000 in March 2002, an increase of $1,000, or 1.1 percent, over the previous March. Total sales in the first quarter of 2002 were 3,248, a 27-percent increase from the first quarter of 2001. Building permits for single-family housing in Oklahoma City continued to be brisk through March at 1,313 units, a 28-percent increase from the same period last year. A smaller increase, 17 percent, was recorded in the Tulsa area, where 945 single-family permits were issued during the first quarter of this year.

Multifamily permits in the Southwest totaled 43,829 units, up by 5,913 units in the 12 months ending in March, an increase of nearly 16 percent. Most of the gain was reported in Texas with a total of 25,603 multifamily units, a 12-percent gain from the previous 12 months. The combination of an increase in rental supply, renters buying homes, and slowing job growth sapped leasing demand within the Dallas-Fort Worth apartment market in 2001. Net move-outs totaled 4,200 units in the 12 months ending April 2002. Average apartment occupancy dropped from 93 percent as of December 2000 to 91.4 percent in April, as 14,000 new units entered the market. With 9,300 multifamily units under construction, the Dallas-Fort Worth apartment market is expected to continue to soften in 2002. The local Houston apartment market demonstrated a solid level of demand in 2001, as 10,370 units were absorbed. Absorption easily outpaced new construction of 6,627 units for the year, down from 8,600 the previous year. A total of 4,800 units were under construction at the beginning of April, and another 7,000 are planned.

Albuquerque’s apartment market delivered a strong performance in 2001, with vacancy rates declining and rents making larger gains than during 2000. Absorption at year-end 2001 was 508 units after being negative in the previous two quarters. This is compared with absorption levels of 2,129 units in 2000 and 1,491 in 1999. The overall average vacancy rate declined to 6.4 percent at the end of 2001. Average market rent was $565 in December 2001, up from $559 a year ago. The market is expected to soften in 2002, as up to 4,000 construction jobs will be lost by this summer when construction at Intel and the “Big I” interstate highway project end.

Occupancy in Tulsa’s apartment market reached a 25-year high of 94.5 percent in 1998. Since then approximately 4,000 new units have been added to the inventory, annual job growth has declined, and rents have risen 1 percent annually. This combination of factors has lowered occupancy in units built since 1995 to 88 percent and overall to 92 percent. Occupancy in Oklahoma City’s apartment market has remained at a stable 93 percent over the past 3 years, with 1,000 units absorbed annually. There are 1,400 units either under construction or planned, and developers seem reluctant to consider further units until job growth and rents increase.

Most of the rental markets in Louisiana are in balance. In Baton Rouge, the 2,173 units currently in the pipeline (434 under construction and 1,739 planned and announced) are in line with annual absorption. Occupancy in January was at 93 percent, and rents have increased 4 percent over the past 12 months. In the past 2 years, occupancy in New Orleans has stabilized at around 93 percent, and rents have increased only minimally.