Downstream Products
November 20, 2025
AIA: Architecture business conditions remain soft, firms cautious for next year
Written by Brett Linton
Architecture firms reported a modest improvement in billings in October. However, business conditions remained soft, according to the latest Architecture Billings Index (ABI) report from the American Institute of Architects (AIA) and Deltek.
“Architecture firms estimate that billings declined modestly this year. Unfortunately, they are not expecting a significant turnaround in 2026,” said AIA Chief Economist Kermit Baker. He explained that most firms predict similar billings next year, while only a third foresee improvements.
The October ABI ticked up four points from September to 47.6, its strongest reading in 11 months (Figure 1). The ABI has been in contraction for all but two months since October 2022, indicating consistently weakening business conditions since the post-pandemic rally.
The ABI is a leading indicator of nonresidential construction activity, typically projecting business conditions approximately 9-12 months in the future (the usual lag between architecture billings and construction spending). Readings above 50 indicate increasing billings, while those below indicate reductions.
Participant comments:
- “The Northeast remains incredibly difficult to develop in due to increased requirements on affordable units and high construction costs in Boston, and low margins and lack of infrastructure (power/sewer) to support new developments outside the city. We have been working to diversify outside the Northeast in order not to be tied to local conditions.” – Northeast firm with institutional specialization
- “Still seems to be strong, as the area keeps getting companies moving into the state from other states, which increases the need for housing, retail, etc.” – Western firm with commercial/industrial specialization
- “We are starting to see many projects shake loose in the multifamily sector.” – Midwestern firm with residential institutional specialization
- “Okay, today, but in six months, we have concerns.” – Southern firm with institutional specialization
Subindex trends
The new project inquiries index jumped to a 19-month high of 54.8 in October, marking six consecutive months of growth. The design contracts index remained in contraction for the 18th straight month at 47.1, though it was on the higher end of readings over the past year.
Two regional indices (Northeast and West) ticked higher from September to October, though all four stayed below the 50 threshold (Figure 2, left). The Midwest was the strongest region at 49.6, just below the growth threshold, while the West was the weakest at 42.1.
Three of the sub-sector indices were flat to down from September (all but institutional) and continue to indicate a reduction in billings. Commercial/industrial saw the largest drop, falling nearly three points to a five-month low of 43.9 (Figure 2, right). AIA found that firms with a multifamily specialization were the most optimistic for improving business conditions next year.
