Regional Reports

Nonagricultural wage and salary employment in New England declined by 54,400 jobs, or 0.8 percent, in the 12 months ending December 2002. These losses were overwhelmingly concentrated in Massachusetts, where 49,000 jobs were lost. Connecticut lost almost 9,000 jobs and New Hampshire lost just over 3,000. Maine and Vermont had minor gains and Rhode Island increased employment by 3,700 jobs, or 0.8 percent, to almost 488,000. Overall the States in this region lost 40,200 jobs, or 3.2 percent, in goods-producing industries that represented 74 percent of the total nonagricultural jobs lost. Massachusetts and Connecticut had the most losses in goods-producing jobs, 30,100, or 75 percent of the region. In New England the unemployment rate as of December 2002 was 4.6 percent, up slightly from recent months and up from 3.9 percent in December 2001. Massachusetts had the highest unemployment rate, 4.9 percent; and Vermont had the lowest unemployment rate, 3.9 percent.

Massachusetts, particularly the Boston metropolitan area, is the engine that drives the economy of the region, but by the end of 2002 there was a significant loss of momentum. At approximately 3.3 million nonagricultural wage and salary jobs as of December 2002, the Massachusetts economy lost 104,400 jobs in the past 2 years. Consumer confidence is at its lowest point in 7 years. Orders for manufactured products are not increasing and construction jobs are down. The fiscal crisis in State government is also responsible for the loss of government jobs. The major bright spot in the Massachusetts economy has been the healthcare industry, where 10,000 jobs have been created over the past 2 years.

Residential building activity throughout the region, as measured by building permits, was up approximately 10 percent for all of 2002 compared with 2001. At more than 38,000, single-family units increased more than 7 percent; multifamily units permitted, however, were up more than 26 percent. The bulk of these units, more than 42 percent, are located in Massachusetts, where multifamily permit activity was down almost 5 percent. However, there were some dramatic increases in multifamily units in Rhode Island, Maine, Vermont, and New Hampshire. In Rhode Island, the number of multifamily units increased almost 400 percent more than the volume in 2001 because of increased activity in the Providence metropolitan area. Maine, Vermont, and New Hampshire, with a combined total of 3,350 units, recorded increases of 55, 80, and approximately 300 percent, respectively. The 8,900 multifamily units permitted in the New England region in 2002 was the highest total since the mid-1980s and more than 50 percent greater than the annual average during the last decade.

Local sources indicate that more than 7,000 units in 40 projects in the city of Boston are either under construction or in planning stages. Additionally, local colleges and universities in the city are currently proposing more than 2,000 units of student housing. Boston is actively promoting the development of new multifamily housing and considering zoning variances for projects with substantial affordable housing components, depending on location. The three metropolitan areas located in southern New Hampshire, Manchester, Nashua, and Portsmouth, permitted approximately 1,440 multifamily units during 2002, almost 4 times the annual average number of multifamily units permitted during the past decade. The Department of Housing and Urban Development has been very active, particularly in the Manchester market area, by providing the mortgage insurance for several projects recently completed or under construction, and additional projects are in the planning stages. The lower cost of living, job creation, a stable economy, and a thriving regional airport are supporting growth and development in the area. The widening of a 17-mile length of Interstate 93 between Manchester and Massachusetts is scheduled to begin next year, and that will help accommodate recent population growth and support future expansion.

Sales of existing homes in the New England States slowed in the third quarter of 2002. Excluding New Hampshire, for which data were not available, the rate of sales was down almost 4 percent compared with the third quarter of 2001. Sales remained brisk for most lower end homes and condominiums; however, the higher priced inventory is remaining on the market longer, resulting in slower sales and a somewhat lower rate of price increases.

According to the Office of Federal Housing Enterprise Oversight (OFHEO), annual price appreciation in New England was 9.8 percent from the third quarter of 2001 to the third quarter of 2002, again the highest rate in the Nation. Rhode Island had the highest State ranking at 14.1 percent and 5 New England States ranked in the top 10 locations. Only Vermont had a rate of appreciation below 8 percent, at 6.8 percent. At 14.1 percent, the Barnstable-Yarmouth metropolitan area portion of Cape Cod had the second highest rate of appreciation in the Nation for metropolitan areas.

Newly released sales data from the Massachusetts Association of REALTORS^® for all of 2002 indicate a 5.1-percent gain in the number of single-family home sales and a 13.4-percent increase in the number of condominium unit sales compared with 2001 for the State. Average sales prices were quoted as $346,025 for single-family homes and $243,950 for condominiums, up 12.0 and 16.3 percent, respectively, from December 2001.

Despite recent economic uncertainties, rental markets in most New England markets are still stable. Vacancy rates increased somewhat from very tight levels that were under 3 percent during the past year in eastern Massachusetts markets. Because the process for adding multifamily inventory is so cumbersome and time consuming in most New England markets, market conditions tend to change very slowly. By historical standards, relatively high levels of multifamily units are now under construction or in the planning stages. The lack of economic growth, however, could result in a considerable softening of the regional rental markets. According to Reis, the third-quarter rental vacancy rate in the Boston metropolitan area was 3.6 percent, a significant increase over the past few years, and inventory is increasing and rent increases are moderating. Reis also reports that the Fairfield County, Connecticut, rental market is very strong with a rental vacancy rate of 4.7 percent, up slightly from the previous quarter with rent levels moderating somewhat.