The economy of the Northwest region continued to slow during the past 12 months. Nonagricultural wage and salary employment declined by 1.3 percent, or 69,000 jobs, during the 12 months ending June 2002 compared with a 1.5-percent gain for the same period in 2001. However, the picture was mixed. Alaska and Idaho recorded increases in employment but not enough to offset losses in the larger Washington and Oregon labor markets. Alaska led the region with a 1.7-percent growth rate because of gains in retail trade, health services, and government. In Idaho, employment growth measured 0.75 percent for the 12 months ending June 2002, considerably slower than the 3.4-percent annual rate of growth measured a year ago. The slower rate of growth reflects increased losses in the manufacturing sector. In Washington State employment for the 12-month period was down 1.9 percent, or 50,000 fewer jobs. Nearly every major sector in Washington continued to experience losses, with the exceptions of health services and government. Boeing continued layoffs in the Puget Sound region, totaling an estimated 16,000 as of June 2002, with an additional 3,000 layoffs expected by the end of 2002. Nonagricultural employment in Oregon was down 1.6 percent, or 26,300 jobs, over the same period.

The unemployment rate in the region averaged 6.8 percent for the 12 months ending June 2002, up from 5.3 percent for the same period in 2001. The highest unemployment rates were recorded in Oregon and Washington, at 7.2 percent and 7.0 percent, respectively. Idaho recorded the lowest unemployment rate in the region at 5.3 percent.

Sales housing markets throughout the region remained healthy due to uninterrupted strong demand for homes and low interest rates, although the rate of increase in sales and price appreciation have slowed along with the economy. Oregon’s major markets recorded a 3-percent increase in existing homes sold for the first half of 2002 compared with the same period in 2001 and recorded increases in median sales prices of 1 to 3 percent. In the Portland area, sales were up 2 percent, and the median sales price rose 3 percent to $171,750 for the first 6 months of 2002. In the Boise metropolitan area, existing home sales declined 1 percent, but the median sales price increased 3 percent to $125,400.

Existing sales activity in the Seattle metropolitan area totaled 16,525 homes in the first half of 2002, down 0.5 percent compared with the first 6 months of 2001, according to the multiple listing service. The median sales price rose 8 percent to $268,900 during the 12-month period ending June 2002. Existing home sales rose 1.8 percent in the Tacoma area and 11 percent in the Olympia area for the first 6 months of 2002 compared with the first 6 months of 2001. Sales in the Bremerton area tapered during 2002, with closings 7 percent below the level 1 year ago. Existing condominium sales were level with year-ago volume in the Seattle metropolitan area, while sales were robust in the Tacoma area, up 18 percent; in the Bremerton area, up 46 percent; and in the Olympia area, up 18 percent. Sales of new condominiums continued to struggle in the Seattle area, down 17 percent through June compared with the first 6 months of 2001.

Single-family building permit activity in the Northwest during the first half of this year totaled 39,179 homes, up 3 percent compared with the same period in 2001. In the Puget Sound area (Bremerton, Seattle-Everett, and Tacoma), the volume of building permit activity, 8,572 homes, was essentially unchanged compared with the first half of 2001. In the Portland-Vancouver metropolitan area, activity for the first half of the year dropped 3 percent to 5,608 homes.

Rental markets in the Northwest remained strong, but conditions were more competitive in the largest markets compared with last year. These more balanced conditions are the result of a number of factors: current economic conditions, lower growth in renter demand, a significant supply of new units entering the market, and a substantial number of renters becoming homeowners as a result of the current low mortgage interest rates. The rental vacancy rate in the Portland metropolitan area reached 7 percent as of the second quarter, up from 5 percent in the second quarter of 2001. The Salem metropolitan area was balanced with a 5-percent vacancy rate, unchanged from a year ago. Rental market conditions in the Boise metropolitan area are soft, with a 9-percent vacancy rate.

In the Puget Sound area, rental markets were generally balanced but increasingly competitive in the Seattle metropolitan area. The vacancy rate as of the second quarter in the Seattle metropolitan area was estimated at 8.5 percent, more than double the 4-percent vacancy rate recorded for the second quarter of 2001. Conditions are balanced in the Olympia and Tacoma rental markets, with overall rental vacancy rates of approximately 6 percent compared with tighter market conditions a year ago. Market conditions remained tight in the Bremerton area, with a vacancy rate estimated at 3.5 percent, owing to the lack of new construction and relatively affordable rents compared to nearby Seattle. In eastern Washington, conditions were balanced in the Spokane metropolitan area but tight in the Tri-Cities area because of increasing employment at Hanford.

Multifamily building permit activity totaled 8,353 units in the Northwest region during the first 6 months of 2002, a 13-percent decrease compared with the first half of 2001. The decline was largely attributable to the Seattle-Everett area, where multifamily permits fell 33 percent to 2,896 units because of the current oversupply.