Manufacturers/End Users
August 19, 2026
AIA: Architecture business conditions remained soft in July
Written by Brett Linton
Architecture firms reported a modest decline in billings in July, with business conditions remaining soft, according to the latest Architecture Billings Index (ABI) release from the American Institute of Architects (AIA) and Deltek.
“Macroeconomic uncertainty continues to weigh on the built environment,” said AIA chief economist Richard Branch. He explained that elevated oil prices were increasing inflationary pressure, potentially leading to higher interest rates later in the year and further constraining developers.
The report explains that the broader economy remained mixed, with architecture services employment declining for a fourth consecutive month. It also noted that 30% of firms had considered or undertaken merger and acquisition activity over the past year.
The July ABI eased almost one point from June to 46.6, right in the middle of readings seen across the past year (Figure 1). The ABI has been in contraction for all but two months since June 2022, indicating consistently weakening business conditions since the post-pandemic rally.
The ABI is a leading indicator of nonresidential construction activity, typically leading construction spending by approximately 9–12 months. Readings above 50 indicate increasing billings, while those below indicate reductions.
Participant comments:
- “Projects are plentiful, just small.” – Northeastern firm with residential institutional specialization
- “We recently had 10 bidders for a small renovation project on a challenging site. I don’t recall work of all scales and of every type stopping this abruptly in almost 40 years.” – Western firm with mixed specialization
- “Business conditions are tepid, but outlook for new work is good.” – Southern firm with commercial/industrial specialization
- “We are having a slow couple of months with a huge uptick anticipated in the fall when several large projects will start.” – Midwestern firm with institutional specialization
Subindex trends
The new project inquiries index remained in growth territory in July at 52.6, falling from the second-highest reading in more than two years. The design contracts index slipped to 47.2, remaining in contraction for the 27th straight month.
Two regional indices (Midwest and West) rose from June to July, though all four remained below the growth threshold (Figure 2, left). The South was the least weak at 48.7, while the Northeast was the weakest for the second-consecutive month at 44.8.
The multifamily residential and mixed practice sector indices increased in July, while commercial/industrial and institutional were unchanged (Figure 2, right). All continued to indicate a reduction in billings. Multifamily residential and institutional firms had seen modest growth earlier in the year but have since weakened, while commercial/industrial firms have not recorded billings growth in four years.
Note: AIA calculates the regional and sector sub-indices as three-month moving averages.
