Nonagricultural employment in the Southwest region remains weak with the loss of 72,600 jobs, or 0.5 percent, over the 12 months ending November 2002. The manufacturing sector showed the greatest decline with a loss of 78,400 jobs, or 4.6 percent, followed by the transportation and utilities and trade sectors. Oklahoma experienced a positive growth of 9,500 jobs, or 0.6 percent; and New Mexico posted a gain of 5,300 jobs, or 0.7 percent. Employment remained flat in Louisiana. These minimal gains within the region were more than offset by a loss of 83,100 jobs, representing a 0.9-percent decline, in Texas. More than 90 percent of the loss was in the manufacturing and transportation sectors.

Despite declining employment conditions, residential building activity remained strong and shows no signs of abating. All States in the Southwest saw single-family permits increase in 2002, up 10 percent annually to 165,427. Multifamily permits increased 18 percent to nearly 52,400 units. All States except Oklahoma had increased numbers of multifamily starts in 2002. The highest percentages of increases were in Louisiana, with the number of permits issued at almost 81 percent higher than in 2001, and in New Mexico, where the number issued was more than 62 percent higher than in 2001. In Texas permits were issued for approximately 39,900 multifamily units. Much of the activity was in the two largest metropolitan areas: Houston-Galveston-Brazoria with 12,250 units and Dallas-Fort Worth with 12,700 units. Multifamily permit activity in the Austin-San Marcos and San Antonio metropolitan areas totaled 5,450 and 2,700 units, respectively.

The apartment occupancy rate in the Houston metropolitan area declined in the fourth quarter of 2002 to 92 percent compared with 96 percent a year earlier. Given the large number of units in the pipeline, it is likely that occupancy rates will continue to decline in 2003.

According to the Oklahoma City Metropolitan Association of REALTORS^® , the number of existing home sales in 2002 was up by 6 percent from the previous year. The average 2002 sales price of $112,690 was nearly 5 percent higher than the average for 2001. According to CB Richard Ellis of Oklahoma, occupancy in market-rate rentals in Oklahoma City has remained near 92 percent since 1993 with 96 percent in development financed with tax credits.

The Greater Tulsa Association of REALTORS^® reports that existing home sales and average sales price were virtually unchanged from last year. Occupancy rates in Tulsa’s rental market have declined from 94 percent in 2001 to 90 percent in 2002. Local industry sources cited the slower economy and rising homeownership rates as the primary reasons for the change. Newer properties are the most affected with a lower reported occupancy than the overall market.

San Antonio had the most new home starts ever, according to Jack Insellman with American Metro Studies: 9,959 housing starts in 2002, up from 8,820 in 2001 and 8,102 in 2000. Because of low interest rates, renters—many of them single—were buying homes, and existing homeowners were trading up. The average sales price in 2002 was $132,256, up 6 percent from $124,200 in 2001.

In the Austin-San Marcos metropolitan area single-family building permit activity totaled 7,200 homes, less than 1 percent below the activity in 2001. Existing sales rose 3 percent in 2002 and the median price rose 3 percent to $155,900. Although the sales market is stable, the rental market continues to decline. Rental units in new developments are leasing but at the expense of occupancy in existing developments. In 2002 rents fell an average of 6 percent to $699 and the occupancy rate declined to 88 percent due to the approximately 8,000 new units that entered the market during the year. With more than 5,500 rental units expected to enter the market in 2003 and no prospects for substantial job growth over the next 12 months, occupancy rates can be expected to decline further.