The federal Department of Housing and Urban Development has released its second-quarter assessment of U.S. housing market conditions.
Here is the text of the HUD report on the Middle Atlantic Region:
For the 12 months ending June 2002, nonagricultural employment in the mid-Atlantic region declined by 87,067 jobs, or 0.6 percent, to approximately 13.4 million persons. Virginia recorded the largest decrease, down nearly 1 percent, because of continued declines in the transportation and utilities, manufacturing, and construction sectors.
The Washington, D.C., metropolitan area continues to record job growth, but the rate of growth has declined. In the 12-month period ending June 2002, employment increased by less than 0.4 percent, or 10,033 jobs, compared with 2 percent for the period ending June 2001. Northern Virginia continues to lead the region, with an employment growth rate of 2 percent for the 12-month period ending June 2002.
Employment increased slightly in the Baltimore area, but the rate of increase was down from previous figures. Philadelphia, Richmond, Pittsburgh and Wilmington all recorded declines in employment of less than 1 percent, and the Tidewater area remained unchanged.
The unemployment rate for the region reached 4.7 percent for the 12-month period ending June 2002, up from 3.9 percent during the same period in 2001. Virginia saw the largest increase in the unemployment rate during the period to 4.1 percent, compared with 2.5 percent a year earlier.
Delaware recorded a modest decline in the unemployment rate from the preceding 12-month period, owing to small gains in the wholesale and retail trade areas of the economy. Unemployment rates rose in all of the major metropolitan areas in the mid-Atlantic region.
Low interest rates and a relatively stable economic situation in much of the region continue to generate increased demand for new single-family homes in the mid-Atlantic region.
The number of single-family units authorized by building permits in the first half of 2002 totaled 58,108 homes, an increase of 8 percent compared with the first half of 2001.
All of the states recorded increases in activity. In the first half of 2002, single-family permits in Delaware were 17 percent greater than in the first half of 2001, reflecting a new emphasis in 55and older active adult and retirement communities in the state.
Existing home sales in the mid-Atlantic region showed significant increases. NAR reported that the annual rate of sales for states in the region increased 2.7 percent as of the second quarter of 2002 to 496,600 homes. According to the Virginia Association of Realtors, existing home sales in the state were up 12 percent through June 2002 compared with 2001 as a result of both low interest rates and increased inventories from sellers seeking to move up.
The median sales price during the first half of 2002 was $146,369, an 8.7-percent annual increase. Sales were up 13 percent in Northern Virginia, led by Loudoun County. The large number of high-technology job layoffs in the county during the past year has not affected demand. Home sales rose an impressive 29 percent. Richmond recorded a 22-percent increase in existing home sales.
The Maryland Association of Realtors reported that sales through June increased 4 percent over the volume in the first half of 2001. After increasing by 13 percent in 2001, the rate of home sales in the Baltimore metropolitan area has been declining since the beginning of 2002. Sales were up only 3 percent during the first 6 months of 2002 compared with the same period in 2001. Lack of inventory was cited as the primary reason for the declining level of sales. Home prices, however, continued to rise and were up 8 percent, to $153,500, compared with the first 6 months of 2001.
Sales activity in the Washington, D.C., area during the first half of 2002 was ahead of the 2001 volume for the same period. According to local reports, sales of existing homes during the period increased by 2 percent to 43,907 homes. The average sales price, $268,600, represents a 10-percent increase. Increased demand and limited supply continue to drive up sales prices in the area.
Apartment construction in the mid-Atlantic region, as measured by multifamily building permit activity, declined during the first half of 2002. Multifamily building permit activity totaled 11,561 units, 14 percent below the first half of 2001. Activity was down in all states in the region except Maryland due to increased activity in the Baltimore area.
Activity declined significantly in the Washington, D.C., area in response to the more competitive rental market conditions, the large number of units in the construction pipeline, and slowing growth in renter demand. Activity in the metropolitan area during the past 3 years averaged nearly 9,500 units annually. In the first 6 months of this year, permits were issued for 3,786 units, down 26 percent compared with the same period in 2001.
Rental market conditions in the region's largest metropolitan areas are generally either balanced or tight. In the Philadelphia area in the first 6 months of 2002, the apartment market has maintained high occupancy levels, with vacancy rates in Class A garden apartments now estimated at 2.3 percent. In Center City Philadelphia, vacancies in Class A properties have increased slightly to 1.9 percent as new units have entered the market.
Approximately 1,000 units were in lease-up or under construction as of the end of the second quarter of 2002. The downtown apartment market is also strong in Baltimore, where the rental vacancy rate is below 2 percent. Currently, 10 developments with a total of 827 units are in lease-up, and 815 units are in the construction pipeline. The median rents for new units in downtown are $1,025 and $1,548 for one- and two-bedroom units, respectively.
In the Washington metropolitan area, conditions in the rental market became more balanced during the first half of 2002. Market conditions began to firm up during the past 12 months as the large volume of new units entering the market was absorbed. Concessions are still widespread but not as deep, and rents have stabilized for the most part.