Employment in the Midwest region declined by 1 percent to 24.8 million in the 12 months ending June 2002. Only Minnesota and Wisconsin recorded increases in employment of 0.6 percent and 1.6 percent, respectively. The unemployment rate in the region was 5.6 percent in June 2002, compared to 4.6 percent in June 2001. However, employment in the third quarter is expected to strengthen, particularly in the manufacturing, services, and construction sectors. Construction employment in 2002 will receive a boost from ongoing development of new office space totaling approximately 10 million square feet in the region’s largest metropolitan areas. In Chicago, Ford Motor Company’s planned automotive-supplier project in the South Side will add 800 manufacturing jobs by 2003, and Champion Laboratories’ $30 million plant expansion in Southern Illinois will retain 1,500 manufacturing jobs.

The market for existing sales housing in the region continued to be strong in the first half of 2002, with sales at an annual rate of 956,300 homes, 4 percent above last year at the same time. Sales activity through the second quarter remained robust in all the States. The Ohio Association of REALTORS^® reported that low mortgage rates, a recovering economy, and increased consumer confidence continued to boost existing home sales throughout the State, with activity up 4 percent in the first 6 months of 2002 to 57,200 homes. The Michigan Association of REALTORS^® also reported existing home sales were strong through June 2002. Sales activity in Detroit and Grand Rapids increased by 5 percent and 7 percent, respectively. A Chicago-area Realtor reported that existing home sales were strong at the start of the year, and activity has not let up since then.

Homebuilding continued at a stable pace in most of the region’s major markets during the first half of 2002. Building permits were issued for 101,400 single-family homes in the first 6 months of the year, almost identical to the level of activity for the first half of 2001. Chicago area builders reported that, although sales of new homes were down 8 percent in the first quarter, activity strengthened in the second quarter; the first half of 2002 was 2 percent above the strong sales in the first 6 months of 2001. In Chicago’s South Loop, townhomes and condominiums priced between $200,000 and $600,000 are selling quickly to first-time and move-up buyers.

The Building Industry Association of Southeast Michigan reported that builders in 2002 are optimistic about new home sales and residential construction because of the strong turnout of prospective buyers at the Parade of Homes held in March and April. Reflecting the healthy demand for new homes, permit activity in the Detroit-Ann Arbor metropolitan area through June was up 4 percent to 10,150 new homes.

The Minneapolis-St. Paul area remains one of the Nation’s busiest new home markets. Permits were issued for 8,453 new homes in the first 6 months of 2002, a 6-percent increase. The Builders Association of the Twin Cities reported that townhouses, duplexes, and other single-family attached houses are becoming more popular as a result of escalating costs and the growing need for moderately priced homes.

The rental markets in the region remain in balanced to tight conditions. Apartment occupancy in the 92- to 96-percent range as of the second quarter of 2002 was typical. Multifamily building permit activity in the first 6 months was up 9 percent to 28,913 units over the year-earlier period. All States except Ohio reported steady or increased construction activity. Activity in Ohio was down 11 percent. In the Cincinnati-Hamilton area, slower than expected absorption of new apartment units in the first 6 months of 2002 resulted in fewer construction starts, according to CB Richard Ellis. Deliveries of new apartments this year are expected to slow to 1,100 units compared with 2,300 units annually for the past 3 years. The reduced level of apartment construction and anticipated strengthening of Cincinnati’s economy should boost occupancy above 90 percent in 2002 compared with 89 percent in 2001.

In the Minneapolis-St. Paul area, multifamily permit activity in the first half of 2002 totaled 3,331 units, a 76-percent increase over last year. Approximately 2,600 new apartment units are expected to enter the market this year compared with 1,500 units in 2001, according to Maxfield Research Inc. The rental market in the Twin Cities area has begun to loosen after years of tight conditions.

Hendricks & Partners Forecast 2002 estimated that 3,700 new apartment units are likely to reach the Chicago metropolitan area rental market during the year. Approximately 2,600 of these units will be in the suburbs; 1,100 units will be in the city of Chicago. Much of the Chicago supply is in the downtown area and represents the largest addition to the market in a decade. Current market conditions in the downtown area can be described as very competitive. Concessions of 1 or 2 months’ rent are becoming common. Appraisal Research Counselors, Ltd., reported that apartment occupancy in the downtown area increased to 92 percent in the second quarter of 2002 compared with 89 percent for the two previous quarters. Suburban occupancy also was up to 94 percent from 91 percent in the first quarter of 2002. Local sources attribute the improved occupancy rates to Chicago’s strengthening economy.