Architecture Firms See Hope for Revenue Growth in 2025

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After 20 months of decline, October architecture billings show a balanced score

THE MOST RECENT REPORT: November 20, 2024

WASHINGTON – November 20, 2024 – After twenty months of declining billings, the AIA/Deltek Architecture Billings Index (ABI) score for October was 50.3. This score indicates a balance between the number of firms experiencing a decrease in billings and those seeing an increase.

Although there was an increase in inquiries for new projects in October, clients are still cautious about moving forward. The value of new design contracts continued to decline for the seventh month in a row.

“Billings finally stabilized this month, and firms are feeling more optimistic about revenue projections for 2025,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Overall, 41 percent of responding firm leaders expect to see net revenue growth from 2024 to 2025, with 32 percent projecting growth in the 5 percent to 9 percent range.”

Key ABI highlights for October include:

Regional averages: South (52.1); West (47.6); Midwest (46.9); Northeast (45.6)
Sector index breakdown: institutional (50.5); mixed practice (firms that do not have at least half of their billings in any one other category) (48.0); commercial/industrial (47.0); multifamily residential (45.6)
Project inquiries index: 54.1
Design contracts index: 45.3

Regional and sector categories are measured as three-month moving averages and may not align with the national score.

Inside Lighting strives to accurately report certain data on the day it is reported by the AIA, but updates to past data with new three-month rolling averages might not be made. For official and most current reports, refer to the AIA ABI numbers. All ABI data is sourced from the AIA.

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Interpreting the ABI:

The Architecture Billings Index (ABI) is a leading economic indicator of construction activity. It is produced by the American Institute of Architects (AIA) and it reflects the approximate nine-to-twelve month lead time between architecture billings and construction spending.

The ABI is based on a monthly survey of architecture firms that asks respondents to rate the level of their billings (or the amount of new design contracts) as either "increase," "decrease," or "no change" from the previous month. The results are then compiled into an index, where a score above 50 indicates an increase in billings, and a score below 50 indicates a decrease in billings.

The ABI is widely used in the construction industry, as well as by economists and analysts, to track the health of the construction market and to forecast future building activity. It is considered a leading economic indicator because changes in architecture billings often precede changes in overall economic activity, such as employment and GDP.

The ABI provides a snapshot of the demand for design services as well as an indication of the near-term outlook for the construction industry.

The survey panel asks participating architectural firms whether billings increased, decreased or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month.

An index score of 50 indicates no change in firm billings versus the previous month.
A score above 50 indicates an increase in firm billings versus the previous month.
A score below 50 indicates an decrease in firm billings versus the previous month.
NOTE: Index numbers cited for the last three reported months are preliminary.
The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

Source: The American Institute of Architects (AIA)