The average annual rate of growth of nonfarm employment in the New England region in the 12 months ending November 2000 was 1.5 percent, reaching almost 7 million jobs. The average annual rate has held steady for the past 24 months. Vermont and Maine recorded the highest rates of growth at 2.0 and 1.8 percent, respectively. The economic growth in these States is being driven, in large part, by the economies of Burlington, Vermont, and Portland, Maine. New Hampshire had the lowest level of expansion with a growth rate of 0.8 percent. With the exception of Rhode Island, which recorded a small loss in manufacturing, the goods and services industries gained jobs in all of the States. The unemployment rate in New England was down to 2.4 percent in November 2000, from 3.2 percent in November 1999. At 1.7 and 1.8 percent, respectively, Connecticut and New Hampshire had two of the lowest rates in the Nation.

Through December 2000, residential construction, as measured by building permits, was down 7 percent in the region compared with 1999. Multifamily permits are also down compared with last year and with last quarter. Lower levels of single-family activity reflect the tight labor market in the building trades, lack of available sites, and the increased interest rates. Maine and New Hampshire were the only two States to record increased permit activity compared with last year—6 and 7 percent, respectively. Multifamily production in Massachusetts was concentrated in the Boston area, where almost 3,000 units were permitted in 2000—47 percent of the multifamily activity in the region.

The NATIONAL ASSOCIATION OF REALTORS^® (NAR) reported home sales in 2000 of 246,000 homes, down 2 percent from 1999. Every State recorded lower sales except Maine, where sales were up 7 percent. According to the Office of Federal Housing Enterprise Oversight, the New England region had the highest percentage increase in median prices in the Nation, up 11.9 percent from the third quarter of 1999 to third quarter of 2000. Massachusetts again had the highest percentage increase, 14.2 percent, in the region and the Nation.

All of the New England States ranked in the top 12 in the Nation for appreciation.

Residential rental markets in New England continue to tighten. Vacancy rates in most metropolitan market areas are below 3 percent. Except for turnover, vacancies in Class A and AA developments are non-existent. The level of rents continues to rise, putting more pressure on the lower end of the rental market.

Commercial office space markets in eastern Massachusetts had a record year with substantial increases in rent levels, according to industry reports. Vacancy rates have dropped into the low single digits. Sources indicate that commercial rents should stabilize in 2001. With the retrenchment of some Internet and technology firms, additional space is back on the market, relieving some of the pressure on rents.

Spotlight on Hartford, Connecticut

Since the beginning of the Hartford area’s economic recovery 7 years ago, nonfarm employment has increased by approximately 3,800 jobs annually. However, since 1999 the rate of growth has slowed considerably. The rate of increase for the 12 months ending November 2000 was 0.1 percent, compared with 1.3 percent a year earlier. The lack of significant increases in employment growth is the result of continued uncertainty in the area’s insurance and defense industries as well as an extremely tight labor market. The unemployment rate in the Hartford metropolitan area was 1.7 percent in November 2000, down from 2.9 percent in November 1999.

Progress continues on the Adrien Landing project, a major redevelopment of the Hartford Riverfront. Recent plans for East Hartford include the development of a large 700-acre parcel into industrial, retail, and research uses, as well as a football stadium for the University of Connecticut and some housing development. These activities will concentrate considerable economic development adjacent to the Connecticut River.

Residential building activity in the metropolitan area for the year, as measured by building permits, declined 14 percent to 3,330 units compared with 1999. Permit activity in the 1990s peaked in 1998 at 4,475 units, capping a decade-long trend of increasing activity. During the 1990s approximately 90 percent of residential construction consisted of single-family homes. In 2000 single-family activity accounted for 94 percent of the permits.

Local data indicate that residential sales in Hartford County in 2000 were down approximately 8 percent, compared with the same period in 1999. Higher interest rates and limited inventory have reduced sales during this period. At the same time, sales prices continue to increase. According to NAR, median sales price in 2000 had increased by 6 percent to $159,500, compared with a year earlier.

The rental market in the Hartford area continues to strengthen. Vacancy rates in quality properties are reaching very low levels, and few new rental units are being added to the inventory. Typical rent increases in recent years have been 4 percent or less; however, the healthy and stable local economy and strong demand for rental housing portend significant rent increases in the near future. Because of a lack of new luxury inventory, many owners are performing substantial capital improvements and adding amenities to meet the demand for upscale rental housing.