The Architecture Billings Index (ABI) published monthly by the American Institute of Architects (AIA) has reported increased demand again for architecture and design services, marking the eighteenth consecutive month with an uptick. While the score for July, 51.0, is down from June’s 53.2—any score above 50 indicates an increase in billings from the prior month—the AIA said in its report “business conditions” remain “stable.”
The last four ABIs have reported slower growth following a post-pandemic increase, which began in January 2021, and was followed up by nationwide issues such as inflation and now looming economic uncertainty.
“Despite architecture services employment recently surpassing pre-pandemic levels, the ABI score this month reflects the slowest growth since January, and marks the fourth straight month with a lower score than the previous month, indicating a slowing trajectory in billings activity,” said AIA Chief Economist Kermit Baker. “With a variety of economic storm clouds continuing to gather, we are likely looking at a period of slower growth going forward.”
New project inquiries and design contracts also “moderated,” coming in at 56.1 and 52.9; the growth rate reported in June was 58.2 and 52.2, respectively. While this is a decrease in the score, the AIA said in its report it still indicates “strong” growth and confirmation that developers and homeowners are actively starting projects.
Regionally, billings correspond with the “slowing trajectory” pattern reported by the national average score. In the Northeast, the score decreased slightly reporting in at 48.4, down 0.3 from last month. Similarly, the West and Midwest saw decreases in their growth rates; the West, most notably, was down from 57.8 in June to 51.7. The South is the sole region with an uptick in its billings score 53.6, up from 51.5 in June.
Each monthly report collects data on individual building sectors, including multi-family residential, commercial/industrial, institutional, and mixed practice with the data coming in from responding firms. For the month of July all sectors reported steady, similar scores to the previous month, with residential coming out on top with a score of 52.8. The sector reporting the lowest gains was institutional projects, 49.6 in July and 53.5 reported last month.
As we move into the fall will the billings also fall? August saw another month with higher interest rates, after the Federal Reserve raised them 0.75 percent at the end of July, in a calculated effort to lower inflation. This is coupled with reports that housing prices have fallen for the first time in three years and, contrast to that, in New York City the average rent in Manhattan surpassed $5,000 a month. Only time will tell which direction the billings index will go.