During the 12 months ending November 2002 nonagricultural employment in the Mid-Atlantic region declined by 116,317 jobs, or just under 1 percent, to approximately 13.4 million. The region as a whole has not recorded a 12-month gain in employment since January 2002. Pennsylvania, Virginia, and Delaware recorded the largest decreases for the 12-month period, approximately 1 percent because of continued declines in the manufacturing, transportation, and utilities sectors; Pennsylvania alone has lost 24,000 manufacturing jobs over the past year. The stability of Federal Government employment and the service industries that support it helped the District of Columbia to report the smallest decline in nonagricultural employment. Northern Virginia, which had led the region in employment growth for the past several years, experienced a 1.5-percent decline, or a loss of 17,300 jobs. Gains in government-related employment could not offset continued losses of airline-related jobs in the transportation sector and telecommunications losses in the utilities sector.

The unemployment rate for the Mid-Atlantic region was 4.9 percent for the 12-month period ending November 2002, up from 4.1 percent during the same period in 2001 but significantly less than the national average. Unemployment rates rose in all of the States in the region but remained flat in the District of Columbia. The Philadelphia metropolitan area’s unemployment rate of 5.3 percent for the 12-month period was a significant increase from the 4.3 percent reported a year earlier resulting primarily from the loss of 9,000 manufacturing jobs.

The demand for new sales housing in the Mid-Atlantic region continued strong in 2002 in response to low interest rates. Single-family building permit activity for the year was the highest of the past 8 years. The number of single-family units authorized by building permits through December 2002 totaled 116,065, an increase of 11 percent over 2001. Single-family building permit activity in the individual States in the region ranged from a 3-percent increase in Maryland to a 29-percent increase in Delaware. Although the District of Columbia represents a small portion of the region’s single-family construction, it issued its largest number of single-family permits in 2002 compared with the previous 8 years. Between 1994 and 2001 the District recorded an annual average of 129 single-family permits; however, in 2002 a total of 383 single-family permits were issued.

Existing home sales in the Mid-Atlantic increased in 2002. The Virginia Association of REALTORS^® reported that existing home sales in the first 11 months of 2002 totaled 102,347 homes, up 8.3 percent over the same period in 2001. In the Washington area, activity set a record with approximately 110,000 home sales for the year, a 6-percent increase over 2001. Sales in the Northern Virginia area rose 8 percent to total 50,163 homes. The Washington area had a record year in condominium sales. Fueled by younger couples and singles unable to afford the single-family detached market and by empty nesters downsizing from larger homes, 1,200 new units and 17,500 existing units were sold through the year’s end. As of December 2002, 4,000 new condominium units were in planning stages.

The Maryland Association of REALTORS^® reports that annual sales through December 2002 increased 4 percent over the volume reported during 2001 with the median price for units sold in Maryland at $172,800. The Baltimore metropolitan area continued its slower pace of home sales and ended the year with total sales for 2002 only 3 percent greater than in 2001.

Pennsylvania reported sales of 132,025 homes during the first 9 months of the year, an increase of only 3 percent over the comparable period in 2001, and sales prices increased by more than 10 percent. Local sources predict that growth rates will slow in 2003.

Apartment construction in the Mid-Atlantic region as measured by multifamily building permit activity totaled 27,187 units during 2002, 1 percent below the total for 2001. Virginia reported the only significant gain with a 27-percent increase in multifamily permits. The 13,830 multifamily units permitted in 2002 exceeded the total number of units permitted in any of the previous 8 years.

The region’s largest metropolitan areas are beginning to loosen from the tight market conditions of the past 2 years. In the Washington metropolitan area, the year-end vacancy rate for both class A and class B rental units edged up to 2.8 percent from 2.5 percent in December 2001. In the District of Columbia, the vacancy rate for class A properties was 6.2 percent, and rent concessions were being offered. At the year’s end there were almost 21,000 units under construction in the metropolitan area with another 10,500 planned and likely to be available within the next 36 months. According to Delta Associates, the average absorption for a development is 14 new units per month.

Class A vacancies in the Philadelphia metropolitan area garden apartment market have somewhat increased and range from 3 to 4 percent in the market’s suburban counties. There currently is an extensive pipeline of 5,300 units in the planning stages, but developers may not proceed with all of those potential projects. In Philadelphia’s Center City, vacancies in class A highrise properties are estimated to be 1.6 percent. The absorption rate for recently completed developments in Center City has dropped to 9 units per month. In addition to converting former industrial and commercial office buildings to rental housing, developers are also converting space above the shops in the downtown shopping area.

The vacancy rate in class A properties in the Baltimore metropolitan area has doubled to 3.1 percent, according to Delta Associates. Class A vacancies in the city of Baltimore’s downtown submarket have increased to an estimated 2.9 percent with approximately 1,650 units under construction or planned. Absorption rates of new units have been low and rent concessions are anticipated.