Regional Reports

Nonagricultural employment in New England declined by 50,400 jobs or 0.7 percent in the 12 months ending September 2002. These losses primarily affected Massachusetts and, secondarily, Connecticut. Rhode Island, Maine, and New Hampshire recorded small gains with Rhode Island registering the highest rate of job increase at 0.5 percent, or 2,600 jobs. Despite increases in construction jobs, Massachusetts lost 48,000 jobs during the period, including 32,000 in wholesale and retail trade and other service-producing industries and 16,000 in goods-producing industries. Business services continued to lose jobs, but these losses were partly offset by increases in the health and educational services sectors. Connecticut lost a net 6,300 nonagricultural jobs; a loss of 10,100 jobs in goods-producing industries was partially offset by an increase in serviceproducing jobs. Across the region, 74 percent of the job losses were in goods-producing industries with approximately half of those losses in Massachusetts. The labor market conditions in Rhode Island and Maine, which are relatively more stable than those of Massachusetts, are reflected in the increased passenger traffic for Warwick, Rhode Island’s T.F. Green Airport (up 26 percent from September 2001) and Maine’s Portland International Jetport (up 37 percent for the same period). For the first 9 months of 2002, traffic at Boston’s Logan International Airport declined 13 percent from the same period a year earlier. The region continues to experience a buoyant housing market and strong levels of consumer spending despite depressed commercial real estate markets, continued layoffs and job losses, and stalled income growth.

Residential building activity throughout the region as measured by building permits increased more than 12 percent during the first 9 months of 2002 compared with the same period in 2001. Single-family homes increased approximately 8 percent overall, 16 percent in New Hampshire, and more than 12 percent in Maine. As is usually the case most of the multifamily development in the region is occurring in Massachusetts, particularly the greater Boston area. However, in the Manchester, Nashua, and Portsmouth areas in southern New Hampshire construction began on more than 1,100 multifamily units in the first 9 months of 2002.

It is estimated that sales activity in the New England States increased in the first 9 months of 2002 approximately 5 percent based on data from the NATIONAL ASSOCIATION OF REALTORS^® (NAR) and local sources. Continued low interest rates and an increased supply of existing homes available for sale have contributed to the increase in activity. With demand so strong, prices are rising dramatically even though inventory has increased. NAR data indicate that during the third quarter of 2002 the median price of homes sold in Boston, New England’s largest metropolitan area, had increased 13 percent to $415,800.

According to the Office of Federal Housing Enterprise Oversight (OFHEO), annual price appreciation in New England was 10.5 percent from the second quarter of 2001 to the second quarter of 2002, the highest rate in the Nation. The New England States ranked second through fifth in price appreciation and occupied 6 of the top 12 places. Rhode Island’s rate of appreciation was 12.7 percent with Maine, Massachusetts, and New Hampshire all having rates of just over 10 percent. The top-ranking New England metropolitan areas were Barnstable-Yarmouth, Worcester, and Providence with price appreciation rates of 14.4 percent, 13.1 percent, and 12.9 percent, respectively.

Rental markets throughout New England remain strong and relatively stable. Although softness in the economy has led to increased vacancies at the higher end of some markets, it has also created greater levels of demand at the middle and lower ends of many markets. These segments of the market have tightened considerably, and vacancies in most rental markets amount to no more than normal turnover. The affordability of rental housing has again risen to the top of the political agenda, and two recent events in the Boston market demonstrate the sensitivity of this problem. The mayor of Boston has submitted a proposal to the city council to reintroduce a form of rent control to the city’s rental housing stock. Rents would be frozen at 2002 levels and could be raised annually only by predetermined percentages. Low- and moderate-income tenants would receive additional protections. Passage by the city council and the State legislature is uncertain, however. Also in Boston, ground was recently broken for a 41-unit development intended to house and service foster and adoptive families and senior citizens. This project includes single-family homes, duplexes, and apartments and is one of three in the Nation created for senior citizens and extended families with foster children.