The economy in the Midwest region remained strong throughout 1999, but growth was slower than in 1998. Nonagricultural wage and salary employment in the region in the 11 months ending in November increased 1 percent, compared with 1.4 percent for the same period in 1998. Business services, retail trade, and construction provided two-thirds of the 230,000 new jobs added during the period. Labor markets are tight in all States, with shortages of skilled and unskilled workers reported throughout much of the Midwest. The unemployment rate in the region was 3.6 percent as of November 1999, down slightly from 12 months earlier.

The Midwest had another strong year for home sales and construction in 1999. Based on data from the NATIONAL ASSOCIATION OF REALTORS^®, existing sales in the region totaled 938,500 homes in 1999, up 2 percent from 1998. Sales in Illinois and Indiana increased the most, up 3.7 and 4.8 percent respectively. Single-family building permit activity for the year totaled more than 206,000 homes, a 6-percent increase over 1998, with all States recording increased activity. The Wisconsin Builders Association reported that home construction activity in 1999 reached its highest level in 20 years, with more than 23,300 single-family homes built. Indianapolis-area builders also reported their best year in the past 20 years, with the construction of 13,900 new homes during 1999. Construction in 2000 is expected to remain at 13,000 to 14,000 homes. In Minnesota, the Builders Association of the Twin Cities reported that continued strong demand for new homes in all price ranges kept construction at high levels in 1999. Building permits were issued for 18,319 new homes in the Minneapolis-St.Paul area, a 9-percent increase over 1998 and the highest volume of the decade. Area builders expect the healthy sales market to continue well into 2000. Existing home sales in the Twin Cities during 1999 totaled 49,800, down slightly from 1998's record volume. The median sales price for 1999 was $138,700, an 8.4-percent increase from 1998 and the largest percentage gain in the region.

Chicago's strong economy continued to support a rapidly expanding market for new homes in 1999. Building permits were issued for 28,662 single- family homes in the metropolitan area during the year, an increase of 13 percent over 1998. The Chicago Association of REALTORS^® reported that existing home sales in the city during the first 11 months of 1999 totaled 27,800, a record for the sixth consecutive year. The median sales price was up 8 percent to $162,000. Sales of new townhomes and condominiums in the city also set records in 1999. During the first 9 months of 1999, the city of Chicago contributed $171 million toward the development of 7,500 new sales and rental units; this represents a 32-percent increase in funding for affordable housing compared with the same period in 1998.

The Ohio Association of REALTORS^® reported that sales of existing homes during 1999 were almost equal to sales during 1998. Strong new-sales activity in the Columbus and Cincinnati areas led to big increases in single-family permit activity: 23 and 13 percent, respectively. In the city of Cleveland, the largest residential construction project in 50 years began in fall 1999. The Villages of Central will have 420 new homes priced from $100,000 to $200,000. The total development cost of $63 million includes $18 million in HUD funds and land donated by the city.

The market for all types of housing for seniors has been very active in the Midwest. The American Seniors Housing Association's 1999 construction survey ranked the Chicago metropolitan area as one of the most active markets in the Nation, second only to Los Angeles. In Minneapolis-St. Paul, approximately 6,000 housing units for seniors have come on the market during the past 5 years.

Midwest rental housing markets remained strong in 1999, with apartment occupancy rates of 93 percent or higher in most areas. Multifamily building permit activity in the region during 1999 was up 6 percent to 62,640 units. Substantial increases were reported in Illinois, Minnesota, and Ohio.

In Columbus, increased demand for rental housing encouraged builders to take out multifamily permits for almost 7,000 units during 1999. Activity in the Cincinnati-Hamilton area increased to 4,425 units. Downtown Cincinnati's apartment market is beginning to heat up following years of inactivity. Several loft-style renovation projects opened in older buildings in 1999, bringing the total number of market-rate units in the downtown area to approximately 1,000. Demand for rentals in downtown Cleveland remains strong, but the market is becoming more competitive as new apartments enter the market.

In the Chicago metropolitan area, multifamily building permit activity for 1999 increased 21 percent over 1998, to 9,954 units. A recent survey of metropolitan area rentals by the Metropolitan Planning Council reported an overall vacancy rate of 4.2 percent, with vacancies in the city of Chicago slightly higher at 4.5 percent. With occupancy rates at 97 percent and higher, developer interest in the downtown apartment market is the greatest since the boom of the 1980s. The latest large-scale project planned for the downtown area is the 2,400-unit Illinois Center development. HUD is providing mortgage insurance for a 500-unit apartment building.

In Wisconsin, the Madison Area Apartment Association reported that the vacancy rate in 1999 held steady at 6 percent, and rent concessions were less prevalent this year than last. Developers are showing increased interest in the tight downtown market, where occupancy rates as of the fourth quarter were 97 percent or higher.

Spotlight on Detroit-Ann Arbor, Michigan

The economy in the Detroit-Ann Arbor area has gained strength in the past 3 years. During the 12 months ending in November 1999, nonagricultural employment increased by 28,000 jobs, a 1.2-percent increase over the previous 12-month period. Major growth sectors are business services, retail trade, and construction. Strong employment growth has led to a tight labor market. As of November, the unemployment rate was 2.8 percent.

The city of Detroit continues to record progress in its revitalization efforts. Comerica Bank's Comeback Index, which tracks Detroit's economic turnaround, registered a 4-percent increase from 1998, due to robust economic activity and the strengthening labor market. The unemployment rate in the city was 5.9 percent as of November 1999, down from 6.2 percent a year earlier. City government sources estimate that $10 billion was invested by businesses during the past 5 years, with another $5 billion planned for the next 3 years. Detroit's downtown is experiencing significant development activity-a complete reversal of the 1970s and 1980s, when abandoned and deteriorated structures characterized the area. Compuware Corporation's new headquarters building will anchor the $1 billion Campus Martius mixed-use project and add 3,000 jobs downtown by 2002.

The Building Industry Association of Southeast Michigan reported that 1999 was another strong year for residential construction. Building permits were issued for approximately 20,600 single-family homes in the Detroit-Ann Arbor area, only slightly less than the strong volume in 1998. Despite shortages in a number of skilled trades, materials, and developable sites, builders expect activity in 2000 to remain robust. Sales of new and existing homes totaled 41,900 through November, up 3 percent over a very strong 1998. In the city of Detroit, sales activity was up 11 percent to 2,800 homes. Construction of senior housing was also very strong in 1999.

The American Senior Housing Association's 1999 construction survey reported that 1,100 units were under construction in the Detroit-Ann Arbor area in 1999. Encouraged by better-than-expected absorption of two recently completed assisted living communities, the Sunrise Corporation will open a third facility in 2000 and is planning several additional 80-unit developments in the Detroit suburbs.

The Detroit-Ann Arbor area's healthy economy supports a strong rental housing market. From 1995 through 1999, multifamily building permits averaged approximately 4,400 units per year. Activity in 1999 fell to 4,100 units, due to declining availability of developable sites. Terzo and Bologna's 1999 Apartment Market Survey of 20,000 units reported generally low vacancy rates, in the 2- to 5-percent range.