New England's employment grew by 1.9 percent to 6.6 million for the 12 months ending in November 1997. Much of this gain was in the Boston metropolitan area and the adjacent areas in southern New Hampshire as a result of growth in new high-technology companies and back-office operations, primarily of financial companies. Massachusetts employment, which represents 47 percent of the New England employment, grew by 2.4 percent (3.1 million) in the 12-month period ending in November. Employment in New Hampshire grew by 2.1 percent. New England's unemployment rate declined from 4.1 percent to 3.8 percent from November 1996 to November 1997. Massachusetts, at 3.5 percent, and New Hampshire, at 3.0 percent, continued to report the lowest unemployment rates in the region.

According to one of the Boston area's leading real estate firms, the increased economic activity in the area has driven the vacancy rate for office space to a near-record low of 6 percent, down from 34 percent 10 years ago. The increased demand, even far from downtown Boston around Route 495, has spurred land acquisitions and build-to-suit and speculative developments. New office space construction for the 12-month period through November 1997 exceeded 2 million square feet.

Single-family construction activity in New England has been remarkably stable since 1992, averaging approximately 35,500 homes annually. In 1997 permits were issued for 35,945 homes in the region. According to the NATIONAL ASSOCIATION OF REALTORS^®, existing home sales through the fourth quarter of 1997 rose 12 percent, to 178,500 homes, compared with the same period in 1996. The median sales price for homes in the Boston area increased by 4 percent, to $196,200 for all of 1997.

Multifamily housing permit activity in New England totaled 5,987 units. Increases were reported for Connecticut, Maine, and Rhode Island. Connecticut's increase was largely in New Haven County and Hartford's suburbs. The multifamily unit totals for the Portsmouth/Rochester and Manchester metropolitan areas were up more than 50 percent in response to tight market conditions. Rental vacancy rates are low in these areas and new units are rapidly absorbed.

Spotlight on Waterbury, Connecticut

The Waterbury metropolitan area has survived the job losses of the early 1990s' recession and is making progress to reestablish itself as a regional center. After losing about 10,000 jobs between 1989 and 1992 and experiencing only modest job growth in 1993 and 1994, there have been significant gains since 1995 of about 5,000 jobs, mostly in trade and services. For the 12 months ending November 1997, nonagricultural wage and salary employment averaged 85,750, up more than 2,000 jobs from the comparable period in 1996. About 75 percent of the increase was in service producing industries. A major increase in employment was due in large part to the opening of the Brass Mill Center Mall, with more than 150 stores employing approximately 2,500 persons. The mall is located on a former manufacturing site that had serious environmental problems that were cleaned up through the joint efforts of Waterbury, the State of Connecticut, and the U.S. Environmental Protection Agency. The unemployment rate has declined to less than 5 percent recently and people are returning to the area, especially to the city. This far-reaching renewal has even brought professional baseball back to Waterbury with the renovation of the local stadium and the birth of the Waterbury Spirit of the Northeast League.

From the peak year of 1986, when residential building permits in the metropolitan area totaled more than 2,500 units, activity declined each year to a low of 506 units in 1991. Since 1991 the number of units permitted annually has remained relatively stable, averaging approximately 550 annually. Because of employment growth in recent years and some significant public and private investments, the housing market has begun to improve. Recent home sales activity has been very promising. Home sales for 1997 through November totaled more than 2,600, a 5-percent increase over the same period in 1996. Sales prices have also have begun to increase. The median sales price for the third quarter of 1997 was almost 2 percent higher than for the third quarter of 1996.

The rental housing market in the Waterbury area has improved, but at a very slow rate. Multifamily production in the 1990s has averaged fewer than 75 units annually. Rental vacancy rates are still higher than desirable for normal market conditions. The excess supply of multifamily units is slowly being absorbed -- benefiting primarily the middle and upper end of the market -- as the lack of upward pressure on prices makes the inventory more affordable. Public programs, such as HUD's Community Development Block Grant and HOME programs, have helped address the needs of the middle- and lower-income parts of the market.