Business conditions at U.S. architecture firms remained weak in September, according to the latest AIA/Deltek Architecture Billings Index (ABI) report. The index recorded a score of 43.3, marking the softest reading since April and signaling an increased share of firms reporting a decline in billings.
Inquiries into new projects stayed flat for the second consecutive month following modest growth during the summer, while newly signed design contracts declined for the 19th straight month. These figures suggest that the challenging conditions faced by architecture firms since late 2022 are likely to persist into the near future.
Firm Backlogs Continue to Shrink
Average firm backlogs — a key measure of work in the pipeline — have fallen to 6.1 months, down from 6.5 months at the start of the year. Firms specializing in multifamily residential and commercial/industrial projects reported the shortest backlogs, averaging just five months, while institutional firms reported stronger backlogs averaging eight months.
Although backlogs have declined, they remain close to pre-pandemic levels, suggesting a gradual normalization rather than a steep downturn.
Regional and Sectoral Weakness
Architecture firms in all U.S. regions experienced billing declines in September, with the exception of the Midwest, where conditions were mostly flat. Firms in the West faced the sharpest slowdown for the fourth consecutive month. By specialization, firms focusing on institutional projects reported the weakest business conditions, while commercial and industrial firms saw conditions approaching stability.
Consumer Confidence Drops
Broader economic indicators also reflected caution. The Conference Board Consumer Confidence Index® fell by 3.6 points to 94.2, its lowest level since April. Ongoing government shutdowns limited updates on employment and inflation, but sentiment suggests consumers remain wary of business conditions and job availability.
Reconstruction Work Dominates Firm Activity
Despite weaker demand for new projects, 97% of firms reported working on reconstruction projects — including renovations, retrofits, and building conversions — over the past year. Reconstruction now represents about 50% of total design billings, particularly among smaller firms and those located in the Northeast, where older building stock drives higher renovation demand.
Office buildings led reconstruction activity, followed by college and university facilities (33%), government (30%), and retail and education projects (28%).
The main goals of these projects were modernization (74%), upgrades to building systems (63%), and adaptive reuse or conversions (61%).
Outlook Remains Mixed
Looking ahead, 68% of firms expect the share of reconstruction work to remain steady, while 28% anticipate growth. Firms in the South and larger practices are more optimistic about expansion in renovation-related demand.
With the ABI remaining below the growth threshold of 50 for several months, architecture firms appear to be navigating a prolonged period of subdued demand, underscored by tighter budgets, slower project starts, and economic uncertainty.
