AIA: Architecture Billings "Flat" in November; Multi-family Billings Turn Slightly Positive

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

From the AIA: ABI November 2024: Architecture firm billings remain flat

Despite the AIA/Deltek Architecture Billings Index (ABI) score dipping slightly below 50 for the month, it remains close enough to that threshold to indicate that the share of firms that reported declining billings was essentially the same as the share that reported increasing billings. Although it would be better to see the majority of firms reporting growth, the fact that billings have returned to flat after declining for nearly two full years is an encouraging sign that conditions are improving for more firms. Inquiries into new work continued to grow steadily, and while the value of newly signed design contracts declined for the eighth consecutive month, the pace of that decline slowed this month.

Business conditions continued to improve in the West and South regions of the country in November, where firm billings increased for the second consecutive month. Most notable was the strength of billings growth in the West, where the score was the highest it has been since mid-2022. Although billings continued to decline at firms located in the Northeast and Midwest, the pace of the decline slowed in both regions this month. There was significant improvement in business conditions at firms with a multifamily residential specialization in November as well, where they reported their first increase in billings since August 2022, at the end of the post-pandemic boom. In addition, billings increased for the second consecutive month at firms with an institutional specialization. While billings continued to decline at firms with a commercial/industrial specialization, the pace of the decline slowed significantly.
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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.
emphasis added

• Northeast (46.9); Midwest (48.1); South (50.0); West (54.3)

• Sector index breakdown: commercial/industrial (49.4); institutional (50.6); multifamily residential (50.8)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 49.7 in November, down from 50.3 in October.  Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 24 of the last 26 months.

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 into 2025.

This was first positive score for multi-family since August 2022.  This suggests we will see further weakness in multi-family starts, but a possible pickup in the 2nd half of 2025.