The rate of nonagricultural wage and salary employment growth picked up in the Northwest region during the 12 months ending May 2000, to 2.5 percent compared with 1.5 percent for the same period 1 year earlier. Idaho continued to record the largest percentage gain, 4.7 percent, followed by Washington State at 2.4 percent. Idaho's growth in the communications industry and business and professional services employment offset the weakness in the agriculture and lumber sectors. In Washington, high-technology industries continued to fuel impressive gains in the business services sector, and significant gains were recorded in the construction and health services sectors. The decline in aircraft manufacturing slowed to a loss of 400 jobs a month in the second quarter, compared with an average of 1,600 jobs per month a year earlier. Employment in the aircraft manufacturing sector has dropped 23 percent overall in the past 2 years.

Employment growth in Oregon over the past 12 months improved to 1.9 percent, buoyed by a resurgence in electronic equipment manufacturing. Alaska registered a 1.8-percent increase during the same time period, with the lion's share of gains attributable to transportation and manufacturing. The unemployment rate in the region was 4.6 percent as of May 2000, down from 5.2 percent in May 1999.

The sales housing market in the Northwest remained strong during the first half of 2000, but the rate of increase in home sales slowed about 3 percent from the rapid pace of the past few years. In Idaho, sales of existing homes for the first half of 2000 were down 7 percent from the first half of 1999, according to the NATIONAL ASSOCIATION OF REALTORS^®. Despite the overall drop in Idaho, the Boise area showed no signs of weakening. Sales volume for the first 6 months of 2000 was up 7 percent over the first half of 1999, and the median sales price was up 3 percent to $114,300. Oregon recorded a 5-percent drop in sales, and Washington sales were down 3 percent. Existing home sales in the Portland and Seattle Metropolitan areas for the first half of the year were off by 4 percent and 7 percent, respectively. With the recent declines in values of many technology stocks and the rise in interest rates, local REALTORS^® expect slower than normal market conditions in Seattle and Portland for the remainder of the year.

Single-family building permit activity for the first 6 months of 2000 was down in the Northwest region 9 percent to 27,532 homes. In the Puget Sound area (Seattle-Everett, Tacoma, and Bremerton), permit activity was also off by 14 percent to 7,709 homes. In the Seattle Metropolitan area, activity was down 9 percent. The drop was more a reflection of the scarcity of buildable lots, not a decline in the demand for new homes. In the Portland area, single-family volume through June 2000 was off 12 percent compared with the same period in 1999. The Boise area remained the hottest single-family market in the Northwest, although single-family permits through June were off 10 percent, compared with the very strong first 6 months of 1999.

Multifamily housing building permits in the region during the first 5 months of 2000 totaled 9,661 units, a 21-percent decline compared with the same period in 1999. Activity in the Seattle area, however, was down only 3 percent to 4,951 units. Market conditions in most of the Northwest's major rental markets during the second quarter were balanced but tightening. The apartment vacancy rate in the Portland area dropped to 5 percent, down from 6.25 percent as of the second quarter of 1999. The Boise rental market has tightened significantly in the past 12 months, with the apartment vacancy rate falling to 4 percent as of the second quarter, down from 7 percent in the same period in 1999.

The rental housing vacancy rate in the Seattle Metropolitan area was 4.5 percent as of the second quarter. Occupancy in established apartment projects in the city of Seattle was running at 98 percent or better. Demand for rentals in the downtown area continued to be very strong. New units in downtown Seattle lease up rapidly, even in the highest rent ranges. There are currently over 1,000 units under construction and another 700 in the planning stages. The rent for a two-bedroom unit in the newest buildings typically ranges from $1,500 to $2,000. The average rent for all-size apartments built after 1994 in the downtown is approximately $1,285 a month, according to the Dupre+Scott Apartment Vacancy Report. Vacancy rates in Eastern Washington rental markets have improved, with Spokane between 6 and 7 percent, down from 8.0 percent in the first quarter, and the Pullman market at approximately 5.4 percent, down from almost 6.0 percent in September 1999.

Spotlight on Richland-Kennewick-Pasco, Washington

Employment in the Richland-Kennewick-Pasco metropolitan area, known as the Tri-Cities, has rebounded from the economic slump of the mid-1990s. Nonfarm employment during the 12 months ending May 2000 increased 3.5 percent to 76,200, just shy of the 1994 employment peak of 76,300. The unemployment rate in May 2000 was 5.8 percent, down slightly from 6 percent in May 1999.

For the past 60 years, the Department of Energy's (DoE's) Hanford nuclear facility has been the driving force behind the Tri-Cities economy. The rise and fall in employment at Hanford directly effected the rise and fall in the local economy and the housing market. In the first 50 years, Hanford played a pivotal role in the Nation's defense industry as a plutonium production facility. Currently, Hanford is engaged in the world's largest environmental cleanup project, restoration of the Columbia River Corridor, as well as turning Hanford's central plateau into a long-term waste treatment and storage site. DoE and its contractors currently employ an estimated 10,600 people, approximately 14 percent of the total nonfarm employment in the metropolitan area. This is down from over 18,000 workers employed in Hanford-related jobs in 1994.

The agricultural industry in the Tri-Cities also showed a strong performance. As of May 2000, approximately 12,800 workers were employed by agribusiness, either directly or in food processing.

The Richland-Kennewick-Pasco area has experienced a steady growth in population since 1990, despite the rises and falls in the local economy. As of July 1, 1999, the population of the Tri-Cities area was estimated at 184,000, reflecting a healthy 2.5-percent annual growth rate since the 1990 Census. More than 40 percent of the population growth has been the result of inmigration.

The sales housing market in the Tri-Cities area was relatively affordable compared with the Puget Sound and Spokane markets. The median sales price for existing homes was $111,000 as of the second quarter of this year, up 3 percent from the first quarter of the previous year. According to the Tri-City Association of REALTORS^®, 1,027 homes were sold in the first 6 months of this year, off only 3 percent from the same period in 1999. Listings in the first 6 months were also down 5 percent compared with the same period in 1999. REALTORS^® are generally optimistic about the market for the remainder of the year because of the strong employment growth.

Manufactured housing was an important component of the Tri-Cities housing market, comprising 19 percent of the total housing units in the metropolitan area in 1999, based on a State survey. For the 1990 decade, manufactured homes accounted for 36 percent of all new housing added in the Tri-Cities area. Most manufactured homes sold in the $50,000 to $60,000 range.

Homebuilding activity recently has begun to rebound with the improved economy. Single-family building permits in the metropolitan area in 1999 totaled 963 homes, a 20-percent gain over 1998. For the first 6 months of 2000, single-family permits were up by 18 percent over the same period in 1999.

Multifamily housing building activity during the past 3 years has been practically nil. Rapid employment growth at Hanford during the mid-1990s stimulated apartment construction, but by the time many of the projects reached the market, employment layoffs had begun, and apartment vacancies were increasing. Only 67 multifamily units were built in 1999 and 1998 combined, and there was no activity during the first half of this year. However, the lack of construction and rebounding employment tightened the rental market. A March 2000 survey by Washington State University estimated the Tri-Cities rental vacancy rate at 5.2 percent, compared with almost 11 percent in 1997.

Revitalization efforts in downtown Kennewick resulted in reduced crime and increased sales for downtown businesses. Kennewick used HUD block grant funds to fund many of the programs and changes. Activities over the past 3 years have included street improvements and new lighting, in addition to programs for business facade improvements, microloans, and an incubator building. A homeownership program, aimed toward the downtown area, provides up to $5,000 in downpayment assistance grants for homebuyers whose incomes are at or below 80 percent of the area median and has helped 15 homebuyers in the past 2 years.