by Calculated Risk on 8/23/2023 02:53:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: AIA/Deltek Architecture Billings Index Sees Stable Business Conditions in July

The American Institute of Architects (AIA)/Deltek Architecture Billings Index (ABI) results for July signals mostly stable business conditions. The ABI score was 50.0, indicating that billings at architecture firms remained flat for the month.

“This is the third straight month that billings at architecture firms have stabilized,” said AIA Chief Economist Kermit Baker, PhD. “New project work has been even stronger over this period. This suggests that design work may finally begin to increase over the coming months, although somewhat modestly.”

Firms with a commercial/industrial specialization reported their strongest billings growth in more than a year, while firms with a multifamily residential specialization continued to report declining billings. While this marks the ninth consecutive month of growth for firms located in the Midwest region, firms in other regions reported modest declines in billings.
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• Regional averages: Midwest (51.6); West (49.6); Northeast (49.3); South (48.9)

• ector index breakdown: commercial/industrial (52.7); institutional (51.2); mixed practice (firms that do not have at least half of their billings in any one other category) (46.3); multifamily residential (45.4)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 50.0 in July, down from 50.1 in June. Anything above 50 indicates an increase in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment later in 2023 and into 2024.

Note that multi-family billing turned down in August 2022 and has been negative for twelve consecutive months (with revisions).   This suggests we will see a further downturn in multi-family starts this year.