Nonagricultural wage and salary employment in the Northwest increased by 152,000 jobs (3.4 percent) from the first quarter of 1997 to the first quarter of 1998. Washington led the way with a 3.4-percent rate of growth, followed by Oregon (3.3 percent), Alaska (2.5 percent), and Idaho (2.2 percent). Unemployment in the region was at 4.9 percent as of the first quarter of 1998 and ranged from a low of 4.4 percent in Washington to 6.3 percent in Alaska. Aircraft manufacturing, services, and trade were among the fastest growing sectors of the Washington economy. The booming construction industry in the Puget Sound region also posted strong job gains due to better-than-usual weather during the Winter months. The rate of employment growth in the Seattle metropolitan area, 5.5 percent annually, continued to outpace both Washington and the Nation.

Oregon's economy continued the strong growth trend in employment into the first quarter of 1998, gaining 49,000 new jobs (an increase of 3.3 percent) in the 12-month period ending in March 1998. According to Oregon's State economist, manufacturing job growth is projected to increase by 2.5 percent in 1998 compared with the 3.5-percent gain reported in 1997. Led by nonhealth service industries and retail trade, the nonmanufacturing sector is forecast to grow by 2.5 percent during 1998.

The population throughout the Northwest region is growing faster than the national average. Recent estimates from the Idaho Department of Labor showed the State's population growing by 1.9 percent in 1997, making it the sixth fastest growing State in the Nation. Since the 1990 census, Idaho's population has increased by 20.2 percent.

The number of housing units authorized by building permits in the Northwest through the first quarter of 1998 was up 5 percent from the same period in 1997. The rate of increase was greatest in Idaho (26 percent) and Washington (16 percent). Multifamily permit activity in the region fell by 4 percent, mainly due to the decline of activity in Oregon. The booming apartment market in Seattle pushed Washington's level of activity to 3,225 units, a 25-percent increase. Single-family home permit activity increased in all States in the region except Oregon. Activity in Idaho increased by 21 percent, and in Washington it increased by 12 percent.

Strong employment and population growth stimulated housing market activity throughout Washington in 1997. According to the Washington Center for Real Estate Research, existing home sales were up nearly 9 percent over 1996 levels. The median sales price also increased by 5.9 percent to $150,600. Sales of new and existing homes in Seattle during the first quarter of 1998 were up 11 percent compared with the same period in 1997, and the median sales price was up 14 percent to $182,301.

Affordable housing remains a major challenge in Seattle. A key element to the city of Seattle's proposed housing plan is to encourage higher densities for housing in certain inner-city neighborhoods. A series of housing demonstration projects is being proposed for targeted neighborhoods. The projects include building four cottages on a single lot to test small-lot development, making mother-in-law housing units easier to create, reducing parking requirements, and allowing denser housing in neighborhood commercial areas throughout the city.

In Oregon, the tight conditions in the sales markets of the State's major metropolitan areas have begun to ease somewhat. The more moderate levels of employment growth and in-migration have recently lessened demand pressures. Single-family home sales during the first quarter of 1998 were down 4 percent compared with the first quarter of 1997. Sales prices rose about 4 percent during the 12-month period ending in March 1998, compared with almost 9 percent for the 12 months ending in March 1997. The median sales price of a home in Portland during the first quarter of 1998 was $151,000, up 3.4 percent from the first quarter of 1997. The number of single-family building permits issued in the Portland area for the first quarter of 1998 was down 15 percent. Production cutbacks were especially noticeable for high-priced homes in the $250,000 to $500,000 range.

In Oregon's major metropolitan areas, rental markets have become more competitive due to the increased supply of apartments. Despite increased production in the Seattle area, the apartment market remains tight. In Boise, Idaho, the apartment vacancy rate dropped from 9 percent to 5 percent over the past 12 months. However, due to widespread concessions, rents remained flat. There are nearly 1,400 units scheduled for construction, and the vacancy rate is expected to climb to the 8- to 9-percent range by the Spring of 1999 as new units enter the market.

Spotlight on Anchorage, Alaska

The Anchorage metropolitan area's economy is growing again. For the 12-month period ending in February 1998, employment increased by 3.8 percent after 4 years of very modest gains. The local economy has been buoyed by construction employment due to a steady stream of both residential and commercial building. Two of the largest projects proposed for 1998 through 1999 are the Alaska Seafood Center and a 350-room hotel. In addition, ongoing highway construction, a new commissary/exchange at Elmendorf Air Force Base, and a new Native Heritage Cultural Center will hold construction employment near current levels.

International passenger air traffic fell roughly 20 percent in the past 12 months as a result of financial problems in Asia. The air cargo industry, however, showed no effects from the Asian crisis and experienced gains of 20 percent above year-ago levels. The trade and service sectors still account for most job gains. Federal Government employment, a long-time mainstay of the Anchorage economy, remained stable in 1997 after 4 years of declines. Although State government employment is expected to decline modestly, the State's labor economist for the Anchorage area projects employment growth of just over 2 percent in 1998.

During 1997, building permits were issued for 1,041 single-family homes, a 21-percent increase compared with 1996. For the first quarter of 1998, single-family permits totaled 231, a 20-percent increase from the first quarter of 1997. The most active segment of the new sales market is in the $225,000 to $275,000 price range. Local builders have recently targeted the more affordable market in the $120,000 to $160,000 price range, and townhouses and condominiums are selling for between $110,000 and $125,000. The Alaska Housing Finance Commission offers households that have incomes at or below the median income level of $59,200 up to 2 percentage points off of mortgage interest rates, and a similar program is being administered by Anchorage Neighborhood Housing. In addition, both the city and the Cook Inlet Housing Authority have used HUD HOME funds to provide gap financing for homebuyers.

The home sales market continued to fare well. Total sales in 1997 increased 14 percent compared with 1996, and sales for the first 3 months of 1998 were up 19 percent (676 units) compared with the same period in 1997. The average sales price as of the first quarter of 1998 was $168,300, up 4 percent from the previous year.

The rental housing market has been relatively stable. The overall rental vacancy rate is in the 6- to 7-percent range and is lower in properties with 20 or more units. The Anchorage Mutual Housing Association -- which manages more than 1,100 rental units, including many tax-credit units for low- to moderate-income renters -- reported a vacancy rate of 5 percent overall and 4 percent in tax-credit units. Apartment construction in 1997 (360 units) was down 21 percent compared with 1996, when permits were issued for 455 units, 200 of which had low-income housing tax credits. One tax-credit project is currently in lease-up and is filling quickly. The proposed rents for two-bedroom tax-credit units currently being planned will be about $660 per month, compared with market rents for comparable units that range from $800 to $900 per month.