Billings at U.S. architecture firms shrank again in August. The AIA/Deltek Architecture Billings Index came in at 47.2, and the national number is hiding a regional split that’s getting hard to ignore.
Midwest firms averaged 50.7, growth for the first time in close to a year. Northeast firms averaged 40.7, their weakest reading since 2020. West sat at 49.8, effectively flat, and the South at 46.1. Those are three-month moving averages, which is why they don’t sum to the national score, and the AIA says so in the release.
Inquiries hold up, contracts don’t
Project inquiries came in at 50.8, the only national sub-index above the growth line. Design contracts read 48.3. That gap is the whole story of the last eighteen months: clients keep calling, then don’t sign.
By sector, commercial and industrial was the only category in growth at 50.4. Multifamily residential read 47.8, institutional 47.0, and mixed practice 42.5.
Firm sentiment has drifted with it. The share expecting billings to decline rose from 21% at the end of the first quarter to 29% by the end of the third. Architectural services employment did add 700 positions, though the release attributes that gain to July, not August.
The financing argument
AIA chief economist Richard Branch put the cause on two things at once. “Architecture firms are caught between stubborn inflation and higher borrowing costs,” he said, adding that the Federal Reserve’s latest rate increase “may help ease inflationary pressures over time, but in the near term it adds another headwind for projects already facing a difficult financing environment.”
The inflation data backs the first half of that. CPI rose 0.4% from July after a 0.1% increase the month before, and 3.4% year over year, with gasoline and energy among the largest contributors.
What the number actually is
The ABI is a diffusion index built from a survey of AIA member firms, seasonally adjusted by AIA and Deltek. It is self-reported and it isn’t independently audited. “Lowest since 2020” is the AIA’s own characterization of the Northeast series, not a third-party series check. Treat the regional figures as smoothed averages rather than clean monthly readings.
What it’s good for is lead time. Billings run somewhere around nine to twelve months ahead of construction spending, so a Northeast at 40.7 is a signal about design work that would otherwise have reached contractors in late 2027. Set that against August starts falling 24.8% and the two series are telling the same story from opposite ends of the pipeline.
The one number worth watching next month is inquiries. If 50.8 holds while contracts stay under 50, the problem is financing. If inquiries roll over too, it isn’t.
Source: The American Institute of Architects.