Architectural Services NAICS 541310

Nov 20, 2025 - Architectural Billings Remain Soft

• Demand for building design services rose slightly in October from the prior month, but design demand remained in negative territory, according to a November report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 47.6 compared to September’s reading of 43.3. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries rose to 54.8 in October from 50.1 in September, and the new design contracts index improved from 46.3 to 47.1. The AIA’s Chief Economist, Kermit Baker said, "Architecture firms estimate that billings declined modestly this year. Unfortunately, they are not expecting a significant turnaround in 2026. About a third of firms nationally project that their billings will increase this coming year, and a slightly higher share expect them to remain about the same. Firms with a multifamily specialization are the most optimistic about prospects for 2026"
• North American construction and engineering spending in 2026 is expected to rise 1% after decreasing an estimated 1% in 2025, according to FMI’s fourth-quarter 2025 North American Engineering and Construction Outlook. Multifamily construction is expected to decline by 2% in 2026, amid oversupply in some key markets and weak rent growth. Single-family construction is projected to rise by 1% in 2026, as stubbornly high interest rates and elevated home prices continue to reduce demand. Commercial construction spending is forecast to decline by 4% in 2026 as retail store closures surpass openings for the first time in a decade and warehouse vacancies remain high. Lodging construction is expected to decline by 2% in 2026, amid sluggish business travel growth and as financing conditions and maturing debt pose headwinds. Even as vacancy rates remain high, office construction spending is expected to grow 7% in 2026, driven by the expansion of data centers and the conversion of offices to multifamily use. Federal funding cuts are projected to result in flat educational construction spending in 2026, while healthcare projects are expected to see a 3% increase.

• Multifamily developer confidence improved in the third quarter of 2025 but remained in negative territory, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) rose six points in Q3 2025 to 46 compared to the third quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by one point to 74 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While the MPI index indicates weakness in the multifamily construction market, the softness is mostly concentrated in mid-to-high-rise and condominium development, while developers of low-rise and subsidized rental properties are more optimistic.
• The Dodge Momentum Index (DMI) decreased 7.1% in October 2025 to 283.3 (2000=100), down from the upwardly revised September reading of 304.8. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component declined by 2.9%, while the institutional component fell by 15.2%. For the commercial sector, steady planning levels for data centers, retail stores, and office buildings were insufficient to offset weaker planning for warehouses and hotels. Institutional planning dropped amid a downturn in education and healthcare activity. Dodge’s associate director of forecasting, Sarah Martin, suggested that planning activity may continue to soften amid rising labor and materials expenses and macroeconomic uncertainty.