Spike in Billings Tied to Demand for More Rental Housing

National
Wednesday, October 24, 2012
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BILLINGS (BLUE) AND INQUIRIES (RED) FOR THE PAST 12 MONTHS. (THE ARCHITECT’S NEWSPAPER)

BILLINGS (BLUE) AND INQUIRIES (RED) FOR THE PAST 12 MONTHS. (THE ARCHITECT’S NEWSPAPER)

The AIA has released its Architecture Billings Index (ABI) for September, and the news looks good. According to the organization, the ABI score went to 51.6, up from 50.2 in August (any score above 50 reflects an increase in billings). The spike marks the fastest increase in the demand for design services since 2010.

The AIA tied the upswing in billings to an increased demand for rental housing. “Going back to the third quarter of 2011, the multi-family residential sector has been the best performing segment of the construction field,” said AIA Chief Economist Kermit Baker. “With high foreclosure levels in recent years, more stringent mortgage approvals and fewer people in the market to buy homes there has been a surge in demand for rental housing. The upturn in residential activity will hopefully spur more nonresidential construction.”

BILLINGS BY REGION: NORTHEAST (ORANGE), MIDWEST (BLUE), SOUTH (RED), WEST (GREEN).

BILLINGS BY REGION: NORTHEAST (ORANGE), MIDWEST (BLUE), SOUTH (RED), WEST (GREEN).

As a leading economic indicator of construction activity, ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. The organization asks participants whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. Any ABI score above 50 indicates an aggregate increase in billings. Scores below 50 indicate a decline.

Here’s how the ABI broke down regionally in September: West (53.4), South (51.9), Northeast (49.5), Midwest (47.2).

Here’s how the index broke down by sector: multi-family residential (57.3), institutional (51.0), commercial/industrial (48.4), mixed practice (47.8).

The new projects inquiry index—an indicator of client interest in design services—also showed some growth. It came in at 57.3, compared to a mark of 57.2 the previous month.

BILLINGS BY SECTOR: RESIDENTIAL (ORANGE), COMMERCIAL/INDUSTRIAL (BLUE), INSTITUTIONAL (RED), MIXED-USE (GREEN).

BILLINGS BY SECTOR: RESIDENTIAL (ORANGE), COMMERCIAL/INDUSTRIAL (BLUE), INSTITUTIONAL (RED), MIXED-USE (GREEN).

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