Houston-Galveston-Brazoria, Texas The Houston area experienced several major setbacks in 2001 that have continued to affect the economy in 2002. However, despite thousands of layoffs, the metropolitan area managed to gain 9,500 new jobs, and it posted positive employment growth of 0.5 percent in the 12 months ending June 2002, well below the 55,700 jobs gained during the comparable period a year earlier. Employment growth is expected to pick up in the latter part of the year, but positive employment growth is not expected until 2003. Like many other metropolitan areas, weaker economic conditions have not affected the sales market, which displayed remarkable strength in 2001. Single-family home sales reached a record high, and more than 53,200 homes were sold in 2001, up 1.5 percent from 2000. The sales market remains solid with only slight signs of slowing. Sales in the first 6 months of 2002 totaled 27,800 homes, a 4-percent increase over first-half 2001 sales. NAR reports that the median sales price in the Houston area as of the second quarter was 131,600, a 5-percent increase over the second quarter of 2001. The number of listed homes for sale as of June is up slightly over last year’s figures. The overall rental market in the Houston area remains balanced. Currently, the occupancy rate averages 92.6 percent, down slightly from 94 percent at the end of 2001. Conditions in the rental market have continued to be relatively healthy during the past 2 years due to the significant cutback in construction activity during the period. In 2000 and 2001, multifamily building permit activity for the metropolitan area averaged 7,500 units compared with 16,300 annually in 1998 and 1999. Rental demand in 2001 absorbed 10,373 new units, easily outpacing new construction of 6,627 units for the year. With new development slowing and absorption strong, occupancy rates and market conditions have remained solid across much of the metropolitan area. New apartment completions should maintain a fairly steady pace throughout 2002, totaling approximately 6,500 units for the year. Absorption is expected to remain fairly strong but fall short of 2001’s total. Following economic recovery, occupancy rates and rents should increase again in 2003. Apartments downtown maintained the highest occupancy levels and rents at the end of 2001. The housing market in the central business district and the area inside Loop 610 are growing as the areas gain appeal.

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