Employment growth in the Mid-Atlantic remains healthy but has slowed during the first 9 months of this year. Nonagricultural employment grew by 157,611, or 1.1 percent, during the 12-month period ending September 2001. This compares with an annual rate of increase of 2.3 percent for the same period in 2000. Virginia added the most jobs, with an increase of 66,600 for a 1.9-percent gain and 42-percent share of the new jobs in the region. The services sector was responsible for nearly two-thirds of the new jobs generated in this State. Employment rose 1.4 percent in Maryland and 1.1 percent in Delaware. The remaining States in the region experienced growth rates of less than 1 percent each. With the slowdown, unemployment rates begin to increase. Virginia’s unemployment rate was 3.3 percent in September 2001, up from 2.4 percent in September 2000. In the District of Columbia, this rate was 6.5 percent, up 0.6 percentage points, and 4.5 percent in Pennsylvania, up 0.4 percentage points.

The economic expansion of the Northern Virginia economy continued at an impressive rate in the first three quarters of 2001 despite the slowdown in the national economy and the large number of layoffs in the high-technology industry. Employment increased by 58,560, or 5 percent, in the 12-month period ending September 2001. The Northern Virginia economy is one of the strongest in the Nation and should remain so given the projected level of Federal spending over the next couple of years. The unemployment rate was 2.4 percent in September 2001 compared with 1.7 percent a year earlier.

The total number of single-family units authorized by building permits in the first 9 months of 2001 for the Mid-Atlantic region totaled 80,459 homes, down less than 1 percent compared with the same period in 2000.

Sales of existing homes continued to do well across the region in 2001. In Maryland, existing home sales in the first 9 months of 2001 totaled 59,613, up 13 percent over the same period in 2000, according to the Maryland Association of REALTORS^®. The median sales price was approximately $150,600, a 4-percent increase. With lower interest rates and affordable prices, home sales in the Baltimore metropolitan area rose significantly. Existing sales totaled 26,865 homes during the period, a 16-percent increase compared with the same period a year ago. The median sales price was up 2 percent to $132,330.

A thriving economy and low interest rates continue to be the catalyst for the boom in existing home sales in Virginia. According to the Virginia Association of REALTORS^®, home sales totaled 78,169 through September, an 11-percent increase over the 2000 volume. Sales prices were up 9 percent. In Northern Virginia, sales totaled 32,150 homes through September—also an 11-percent increase. Demand remained strongest in Fairfax County, Alexandria, and Arlington, where homes typically sold in less than 25 days.

In the Washington, D.C. metropolitan area, a shortage of available land and skilled labor resulted in a sharp decline in new home sales. Sales totaled 13,437 during the first three quarters of 2001, down 25 percent compared with the same period in 2000. Meyers Real Estate Information Services reported that the average base price of new single-family detached homes in 2001 through August was $316,433, 10 percent higher than the same period in 2000.

Apartment construction, as measured by building permit activity, was up throughout the region during the first 9 months of 2001. Multifamily building permits were issued for approximately 18,600 units during the first 9 months of the year, 21 percent above the same period a year ago. Activity was up nearly 48 percent in the District of Columbia, Maryland, and West Virginia. Pennsylvania was the only State to record a decline, with activity down 5 percent.

Rental housing throughout the region’s largest metropolitan areas was generally balanced. The rental market conditions in the Washington, D.C. metropolitan area also become more balanced during 2001. The number of new units entering the market in 2001 was the largest in the past 10 years, with much of the increase in Northern Virginia. As a result of the increased supply and the downturn in employment in the technology-heavy submarkets of Reston/Herndon and eastern Loudon County, developments began offering concessions during the summer months. Incentives ranged from a month’s free rent to two round-trip tickets to Paris. Monthly rents for two-bedroom/two-bath units just entering the market start at $1,500. Competition is expected to intensify over the next 2 to 3 years, with slightly more than 14,000 units in the construction pipeline for the entire metropolitan area (5,000 are designated for the technology submarket areas).

Spotlight on Lancaster, Pennsylvania

The Lancaster, Pennsylvania area is typified by agricultural production and tourism related to the area’s Pennsylvania Dutch Old Order Amish and Mennonite communities. However, the area has a diversified economy. Nonagricultural employment increased an average of 3,590 jobs annually from the end of 1991 through 2000, or 1.9 percent annually. In the 12 months ending September 2001, job growth was 0.5 percent greater than for the same period 1 year earlier. Nonagricultural employment averaged 226,917 people during the period. Unemployment increased during the period to 3.1 percent. Lancaster’s manufacturing, services, and wholesale and retail trade sectors each represent approximately one-quarter of total employment. Service industries account for 1 of every 3 new jobs added since 1997, an increase of 5,000 jobs, or 9.2 percent. The area’s largest manufacturing employers include RR Donnelly & Sons Co. (publishing, 2,200 employees), Armstrong World Industries (vinyl flooring, 2,000 employees), New Holland North America, Inc. (farm equipment, 1,700 employees), and Grinnell Corp. (pipe fittings, 1,000 employees). During the 12 months ending September 2001, manufacturing employment declined approximately 1 percent, or 1,100 jobs.

In an effort to increase tourism, a hotel and a convention center are being developed in downtown Lancaster. The $45 million hotel, the first full-service hotel built in the county in 25 years, will occupy the historic Watt & Shand department store building. The hotel, with 300 guest rooms, is expected to bring 400 new jobs to the local economy. The hotel and adjoining $30 million convention center are scheduled to begin operations in 2004.

The Lancaster County metropolitan area is the second fastest growing county in Pennsylvania. From 1990 to 2000, population in the Lancaster area increased 11.3 percent to 470,658. During the period, the population in the city of Lancaster increased 1.4 percent to 56,348. During the decade the number of households in the metropolitan area increased by more than 21,600 to 172,560. The relatively high birth rate in the area was responsible for approximately 73 percent of the increase. The area is also growing due to in-migration. Some of the Lancaster suburbs have become bedroom communities for workers employed in Harrisburg, Hershey, the suburbs of Philadelphia, and York. To manage the area’s population and household growth and to help maintain the agricultural economy, the county established urban growth boundaries and designated areas for agricultural preservation. In recent years, growth has centered in northern areas of the county, such as Brecknock, East Cocalico, Manheim, and West Donegal Townships.

From 1990 through 1994, single-family permit activity averaged 2,132 homes annually. From 1995 through 1999, permit activity fell 29 percent to 1,524 homes annually. The downward trend in activity has continued during the past 24 months. During the first 9 months of 2001, permits were issued for 791 single-family homes, a 10-percent decline from the comparable period for 2000.

Multifamily housing activity has been relatively modest in the Lancaster area during the past decade, averaging approximately 500 units annually in the first half and 300 units annually in the second half. In the first 9 months of 2001, building permits were issued for approximately 150 multifamily housing units, an 8-percent decline from the comparable period in 2000. A significant portion of recent multifamily development has focused on the seniors’ housing market. There are currently 167 units for seniors under construction at 2 continuing care communities. Demand has proven to be strong, with 75 percent of the units preleased.

As of the third quarter of 2001, the Lancaster rental market continues to be tight, as it has been for the past several years. The overall apartment vacancy rate in the area is estimated to be approximately 2 percent. Rent increases have been approximately 3 to 4 percent annually over the past 2 years. The average contract rent for a two-bedroom apartment in the area was $670 as of September 2001. With the tight market conditions, new apartment units are rapidly absorbed. Rents in new two-bedroom garden apartments are averaging approximately $850 a month.

Home sales in the Lancaster metropolitan area during the first three quarters of this year remained quite strong. During the first 9 months of 2001, existing sales totaled 4,321 homes compared with 3,833 homes for the same period in 2000, a 12.7-percent increase and 1.4 percent ahead of 1999’s record high, according to the Lancaster County Association of REALTORS^®. The median sales price for the first 9 months of 2001 was $120,000, or 4 percent higher than the comparable period in 2000. A total of 1,850 new homes entered the market during the third quarter of 2001, up 8.9 percent from the third quarter of 2000.