Residential Real Estate News
U.S. Architecture Billings Index Reports Softening Business Conditions in August
Based on the latest AIA/Deltek Architecture Billings Index for August 2023, market conditions eased with a score of 48.1, marking the eleventh consecutive month of essentially flat billings at architecture firms. Any score below 50.0 indicates decreasing business conditions.
This follows a period of robust growth in 2021 and 2022. While inquiries into new projects remained relatively strong in August, the value of newly signed design contracts declined for the first time since April, indicating that fewer clients signed contracts for new projects than in the prior three months.
"Business conditions at architecture firms continue to be sluggish," said Kermit Baker, PhD, AIA Chief Economist. "New project work coming into architecture firms as well ongoing project activity remain stalled in a relatively narrow range and exhibit very little month-to-month variation. Though this pause has taken pressure off tight staffing conditions across the profession, there is considerable uncertainty over the direction of future activity. ."
Business conditions also remained soft at firms with a multifamily residential specialization and declined modestly at firms with an institutional specialization. However, firms with a commercial/industrial specialization reported billings growth for the third month in a row in August.
The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
Key ABI highlights for August 2023 include:
- Regional averages: Northeast (50.6); South (49.9); Midwest (48.1); West (45.8)
- Sector index breakdown: commercial/industrial (51.5); institutional (49.4); mixed practice (firms that do not have at least half of their billings in any one other category) (46.9); multifamily residential (44.1)
- Project inquiries index: 54.8
- Design contracts index: 47.9
