by Calculated Risk on 6/18/2025 03:26:00 PM
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: ABI May 2025: Despite persistent softness, fewer firms report declining billings
The modest uptick in the AIA/Deltek Architecture Billings Index (ABI) score to 47.2 for the month means that fewer firms reported a decrease than in April. In addition, inquiries into new work increased this month for the first time since January, reflecting the modest degree of stabilization in the economy recently. However, the value of new signed design contracts continued to decline, indicating that while clients are starting to explore new projects, they remain hesitant to sign a contract committing to them.
Business conditions remained soft at firms in all regions of the country in May, although firms located in the South came close to reporting growth. The pace of the decline in that region has slowed over recent months, and firms in that region may be the first to experience growth again. However, firms of all specializations reported declining billings this month, although the pace of the decline slowed at firms with a multifamily residential specialization. Firms specializing in that type of work, as well as in institutional work, look like they’ll be the first ones to turn the corner to growth when conditions start to improve.
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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 (43.6); Midwest (43.5); South (49.2); West (44.3)
• Sector index breakdown: commercial/industrial (43.8); institutional (46.2); multifamily residential (46.1)
Click on graph for larger image.
This graph shows the Architecture Billings Index since 1996. The index was at 47.2 in May, down from 43.2 in April. Anything below 50 indicates a decrease 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 throughout 2025 and into 2026.
Multi-family billings have been below 50 for the 34 consecutive months. This suggests we will see continued weakness in multi-family starts.
