Architecture firms across the United States are seeing yet another month of declining billings, extending an unprecedented streak to 19 consecutive months. According to the latest Architecture Billings Index (ABI) report from the American Institute of Architects (AIA) and Deltek, August's ABI score fell to 45.7, down from 48.2 in July, indicating a faster pace of decline.
A score below 50 suggests a contraction in design services. While a slowdown in demand for architecture services was anticipated, many were hopeful that potential interest rate cuts could spur a revival in project inquiries and design contracts. However, the latest figures suggest otherwise. "Unfortunately, even the impending interest rate cuts didn’t move the needle on project inquiries or new design contracts at architecture firms," said Kermit Baker, PhD, Chief Economist at AIA. "Hopefully, once the trajectory of further cuts gets clarified, delayed projects will restart, and new projects will gather momentum."
Regional and Sector Struggles
The decline was widespread across all regions in the U.S., with the West faring the worst, posting an ABI score of 45.7. The Northeast came closest to the 50-point threshold but still lagged behind at 48.2. The South and Midwest also experienced contraction, with ABI scores of 46.8 and 46.6, respectively.
The index, which breaks down billings by sector, showed that mixed-practice firms (firms that do not have at least half of their billings in any one other category) were slightly more insulated from the downturn, scoring 48.6. Firms focusing on institutional, scored 47.4, while commercial/industrial came in at 46.6. However, multifamily residential projects took the hardest hit, dropping to 44.0.
Key indicators such as project inquiries and design contracts also pointed to subdued activity. The project inquiries index landed at 52.4, and design contracts hovered below the growth threshold at 47.3, signaling continued uncertainty within the industry.
Despite the challenging landscape, architects are cautiously optimistic that clarity around future interest rate cuts could help unlock delayed projects and generate new opportunities for growth.
For more detailed information about the billings report, visit the AIA’s website.
