The American Institute of Architects monthly Architecture Billings Index came in at 51.7, a 1.6 point decrease from August's score of 53.3. The ABI is a leading economic indicator of construction activity in the U.S. and reflects a nine- to 12-month lead time between architecture billings and construction spending nationally, regionally, and by project type. A score above 50 represents an increase in billings from the previous month, while a score below 50 represents a contraction.

"The biggest thing that stuck out to me in the latest report was the drop in billings for the multifamily residential space," says Ali Wolf, the chief economist of ARCHITECT's parent company, Zonda. "There was this belief that higher mortgage rates would push potential homebuyers to the rental market, when in fact, higher rates result in a slower conversion from rental to homeownership but not a pop in demand. There’s another consideration, though⁠—costs. With rents still up compared to last year and inflation exceeding wage growth, there has been some softening in the rental market. That, in turn, has resulted in a shift in sentiment towards new developments in the sector.”

The scores for both project inquiries and design contracts took a dip in September. New project inquiries came in at 53.6, falling 4.3 points from August's score of 57.9. Design contracts posted a scored of 50.7, falling 1.6 points from August's score of 52.3.

“While billings in the Northeast region and the institutional sector reached their highest pace of growth in several years, there appears to be emerging weakness in the previously healthy multifamily residential and commercial/industrial sectors, both of which saw a decline in billings for the first time since the post-pandemic recovery began,” said AIA chief economist, Kermit Baker, Hon. AIA, in a press release from the organization. “Across the broader architecture sector, backlogs at firms remained at a robust sevenmonths as of the end of September, still near record-high levels since we began collecting this data regularly more than a decade ago.”

The month-to-month changes in scores for regional billings—which, unlike the national score, are calculated as three-month moving averages—improved slightly in September. Three out of four regional scores gained ground, with all four scores above 50.0. Billings in the Midwest increased 0.7 point to a score of 52.1, while billings in the West rose 1.4 points to a score of 51.6. Billings in the South decreased 1.2 points to a score of 51.7, and billings in the Northeast rose 4.8 points to a score of 54.6.

Two of September's sector billings scores remained above 50.0 with one score increasing slightly from its August value. The commercial/industrial sector fell 1.6 points to a score of 49.6; the institutional sector increased 6.9 points to a score of 58.9. The multifamily residential score fell 4.1 points to a score of 47.9, and the mixed practice sector fell 0.9 point to a score of 50.3. Like the regional billings scores, sector billings scores are also calculated as three-month moving averages.

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