Most States in the Southwest were still adding jobs in the second quarter, but these gains were offset by a substantial loss in Texas and a modest decline in Arkansas. For the 12 months ending June 2002, total nonagricultural employment in the Southwest was 26,500 jobs less than the average for the previous 12 months, a decline of 0.2 percent. Heavy losses in the manufacturing sector in all States were partially offset by gains in the mining, construction, and government sectors. Texas employment decreased 0.5 percent, or 50,300 jobs.

Despite the job losses, homebuilding activity continued on the upswing in the Southwest through the 12 months ending June 2002. Single-family permits totaled 143,300 homes, up 5 percent from the same time a year ago. In Texas, sales activity was mixed in the first 6 months of 2002, remaining strong in several housing markets and softening in others. Increasing sales were reported in Houston, El Paso, Bryan-College Station, and Lubbock. Areas reporting sales declines were Victoria, San Antonio, Odessa- Midland, and Dallas. Sales in Dallas were off the most in the northern suburban counties affected by high-profile telecommunications layoffs. In the Dallas area, 23,000 single-family homes were sold by June, down 4 percent from the same time a year ago. The Fort Worth area recorded a 12-percent increase in the number of homes sold during the first 6 months of 2002 compared with the first half of 2001.

Nearly 46,000 multifamily units were permitted in the Southwest during the 12 months ending in June 2002, a 21-percent increase from the previous 12 months. Texas was responsible for most of the gain. Permits were issued for approximately 37,000 units in the State, a 16-percent increase from the prior 12 months. An increase in the supply of new units on the market, together with a slowdown in jobs and renter household growth, has resulted in a softening Dallas apartment market. The occupancy rate declined to 90 percent at the end of June 2002. It is estimated that some 9,600 new units will enter the market in the Dallas area over the next 12 months, exceeding the expected demand in the short run and resulting in continued lower occupancy rates. The Fort Worth apartment market is relatively stable with occupancy at 91 percent. The Austin rental market has begun to recover. The occupancy rate in apartments was 91 percent in June.

Albuquerque’s apartment occupancy rate continued to climb through the first 6 months of 2002 from figures below 90 percent recorded at the end of 2001. Overall, occupancy stands at 94 percent and is slightly higher in the northwest and northeast areas of the city. The highest occupancy rate is in moderately priced market-rate units between 8 and 12 years old. Average rent for all units rose nearly 5 percent in the first 6 months of 2002 to $591. The strength of the market will be tested with nearly 1,100 units expected to enter the market in 2002.

In the San Antonio metropolitan area, single-family building permit activity in the 12 months ending June 2002 totaled more than 9,400 homes, an increase of 6 percent from the previous 12 months. However, existing sales for the 12 months were off 6 percent, dropping to 15,235 homes, with a median price of $113,200. The number of multifamily permits increased almost 19 percent to more than 3,200 units. The overall apartment occupancy rate for the San Antonio metropolitan area increased to 92.3 percent as of the second quarter. This was partially due to the fact that only 170 units came on the market during the second quarter. Overall rents have been relatively stable.