The following summaries of housing market conditions and activities have been prepared by economists in the U.S. Department of Housing and Urban Development's (HUD's) field offices. The reports provide overviews of economic and housing market trends. Each regional report also includes a profile of a selected housing market that provides a perspective of current economic conditions and their impact on the local housing market. The reports are based on information obtained by HUD economists from State and local governments, housing industry sources, and from their ongoing investigations of housing market conditions carried out in connection with the review of HUD program applications.
Midwest / Southwest / Great Plains / Rocky Mountain / Pacific / Northwest
Nonfarm employment rose by 97,200 jobs, or 1.5 percent, during the 12 months ending November 1998. Although growth was slower than in the prior 12-month period, the job market remains tight, with unemployment rates at or near record lows. New England's unemployment rate fell from 4.2 to 3.4 percent from November 1997 to November 1998. Massachusetts continued its economic expansion, contributing 63 percent of the region's job growth for the period. The unemployment rate fell a percentage point to 2.9 percent, only the third time since 1970 that it has gone below 3 percent. Boston's "big dig," the highway construction through the center of the city, with 109 separate construction contracts, has accounted for significant spinoff economic activity. At the height of construction activity in 2000, it is estimated that the project will employ 4,000 construction workers.
Residential building permit activity in New England in 1998 was the strongest of the decade, with the number of units up 13 percent over 1997. Homebuilding continues to gain strength. Single-family building permit activity in the region totaled 40,190 homes in 1998, a 12-percent increase over 1997 volume, with all States recording increases. Massachusetts with 16,035 homes and Connecticut with 9,658 led the way.
The annual rate of existing home sales for 1998 was up almost 8 percent over 1997 volume to 213,800 homes, according to the NATIONAL ASSOCIATION OF REALTORS®. Massachusetts accounted for 47 percent and Connecticut 28 percent of the region's existing home sales activity. Maine, Rhode Island, and Vermont all reported substantial increases in sales activity in 1998. The median price of an existing home in the Boston metropolitan area rose 8.4 percent in 1998 to $212,600.
Rental housing markets are tight throughout much of New England, vacancy rates are low, and new units are leased quickly. Except for a slight downward adjustment in 1995, New England's multifamily building permit activity has increased every year since 1992. For 1998, permits were issued for 7,335 multifamily units, a 23-percent increase over 1997. Connecticut and Massachusetts permitted the most units, 2,969 and 2,781 units, respectively.
Spotlight on Hartford, Connecticut
During the past 2 years, the Hartford metropolitan area has experienced significant job gains and a continued recovery from the losses that occurred in the insurance and defense industries in the early 1990s. For the 12 months ending November 1998, wage and salary employment averaged 599,550 jobs, up 1.1 percent or 6,475 jobs from the same period in 1997. This gain follows a 6,825-job increase during the 12 months ending November 1997. Approximately one-third of the increase has been in goods-producing industries, whereas insurance industry employment has stabilized. Unemployment in the Hartford area as of November 1998 was 3.4 percent, down from a high of 7.7 percent in the same month in 1992. Prospects are good for sustained, moderate job growth in the Hartford area.
Since 1995 residential building activity in the Hartford metropolitan area has been steadily increasing. For 1998 the number of units authorized by building permits totaled 4,385 units, up 27 percent from 1997 and the largest annual total of the 1990s. Approximately 80 percent of the activity was for construction of single-family homes. The new rental units that have come on the market have been limited in number and absorbed rather quickly.
The market for sales housing in the metropolitan area continues to improve. After years of declines, sales prices appear to have stabilized and have begun increasing at modest levels. The median sales price for 1998 was $142,800, a 3.4-percent increase, according to NATIONAL ASSOCIATION OF REALTORS® data. Local data show that total residential sales in Hartford County through November 1998 were up 12.4 percent compared with the same period in 1997. This is the third straight year of increased sales, an improvement that is now being noted in the city of Hartford.
As the local economy has improved, so has the rental housing market. Vacancy rates of 10 to 20 percent in apartments in the early 1990s have been significantly reduced. Industry sources report that the apartment vacancy rate in the area may be as low as 5 percent. Recent in-migration from nearby areas is creating demand for both moderately priced and luxury rental units. Rents are increasing 3 to 5 percent annually and, for the most part, are back to prerecession levels. Additions to the inventory have been modest in number and absorption has been very good.
The most significant current developments in the area are the private-public effort to redevelop downtown Hartford and the prospect of the New England Patriots moving to a new downtown Hartford stadium for the 2002 National Football League season. Connecticut has committed $300 million to leverage another $1 billion in the development of a convention center, stadium, housing, parking garages, riverfront reclamation and improvements, and other economic development projects.