The Northwest regional economy continued to slow during the fourth quarter of 2002. Nonagricultural wage and salary employment measured 5,090,400 on an average annual basis for 2002, down 1.1 percent compared with 2001’s average. Alaska was the only State to record employment growth in 2002, up 1.5 percent compared with 2001, due to gains in services and government employment. In contrast Idaho was down 0.2 percent because of losses in construction and electronic and other electrical equipment that more than offset gains in government and health services employment. Oregon employment was off 0.7 percent primarily because of declines in the manufacturing sector’s durable goods industries and the loss of 5,000 construction jobs. Washington experienced the most significant annual decline in the region, down 1.8 percent, the lion’s share attributable to losses in aircraft and parts jobs as well as utilities and retail trade.

Unemployment rates in the region for 2002 remained well above levels in 2001. The regional unemployment rate for 2002 was 6.9 percent compared with 6.0 percent for 2001. The highest unemployment rates were recorded in Oregon and Washington, 7.4 and 7 percent, respectively. Idaho recorded the lowest unemployment rate in the region at 5.4 percent.

Sales market conditions throughout the region showed continued strength in 2002, even with the slower economic conditions. In Oregon’s major markets, existing homes sales increased 6 percent over the 2001 total, and the median price of homes sold increased between 1 percent in Douglas County to $115,000 and 4 percent in Portland to $177,950. Sales of single-family homes rose 27 percent in Coos, 18 percent in Douglas, 12 percent in Lane, and 14 percent in Clark Counties. Sales in the Boise, Idaho, metropolitan area were up 4 percent this year compared with 2001, totaling 10,051 homes, and the median sales price increased 3 percent to $126,300. In Anchorage sales fell 3 percent in 2002 compared with 2001, but the average sales price rose 7 percent to $221,148, according to the Anchorage MLS.

Home sales in Washington State’s markets during 2002 were up 3 percent in the Seattle area, 6 percent in the Tacoma area, and 9 percent in the Olympia area compared with 2001. As of December 2002 median sales prices increased 3 percent in the Seattle area to $253,300, 7 percent in the Tacoma area to $175,000, and 8 percent in the Olympia area to $155,500. Popular western Washington retirement markets showed even stronger increases in sales: 25 percent in Grays Harbor County, 23 percent in Lewis County, and 13 percent in Mason County.

Single-family building permit activity in the Northwest totaled 63,001 in 2002, up 13 percent compared with 2001. In the Puget Sound area (Bremerton, Seattle-Everett, and Tacoma), the volume of building permit activity totaled 17,803 homes, 16 percent above last year, but in the Portland-Vancouver metropolitan area activity for 2002 was 2 percent behind the total in 2001.

Rental markets throughout the Northwest remained highly competitive in most major market areas. The Portland area’s rental vacancy rate rose from 6 percent in the final quarter of 2001 to 9 percent by the end of 2002. The overall apartment vacancy rate in the Portland area was close to 9 percent for most of the year owing to slower population growth and continued job losses. The Medford and Salem area rental apartment markets were balanced with vacancy rates in the 5- to 6-percent range. Increasing enrollment at the University of Oregon kept the Eugene-Springfield apartment vacancy rate at 3 percent during the quarter. In Idaho rental markets were soft in the north central and southwest areas, especially the Boise metropolitan area, where the vacancy rate reached 10 percent. The rental market in Boise remained soft because of the large number of apartment complexes built there during the past 18 months, slower population growth, a weak local labor market, and competition from competitively priced, new construction starter homes. The Boise market is not expected to return to a balanced state until mid-2004.

Rental market conditions in the Puget Sound area ended the year with the Seattle area’s vacancy rate in the 8-percent range followed by Tacoma at 6 percent, Olympia at 4.5 percent, and Bremerton at 3.5 percent. Eastern Washington markets remained mostly balanced, but the Tri-Cities area experienced strong market conditions because of increased hiring at Hanford, spurring developer interest in the area. Multifamily permits for the Tri-Cities metropolitan area totaled 325 units in 2002 compared with just 46 units in the previous year. Overall multifamily permits in the Northwest were on the decline due to the weak economy, totaling 17,832 units in the 4-State region, off 8 percent compared with 2001.