Key RE Index Drops to Record Low in October
A highly-watched indicator of activity among architects, often seen as a leading indicator of construction activity, tanked as design firms saw their billing hours shrink in October. The architecture billings index, or ABI, hit a record-low of 36.2 in October, down from 41.4 in September, the American Institute of Architects said Wednesday. The October level is the worst since the ABI survey data began being collected in 1995; any reading below 50 suggests that billing hours at design and architectural firms decreased. The index maintains a nine to 12 month lag between architecture billings and construction spending outlays, according to a press statement by the group. Of course, the architecture billing index touches a wide swath of the real estate industry, and includes commercial and even government-led construction projects. The AIA also said that a separate index assessing inquiries for new projects score was 39.9, also a historic low point. In other words, there's more pain ahead for the nation's already ailing real estate market. “Until recently, the institutional sector had been somewhat insulated from the deteriorating conditions affecting the commercial and residential markets,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Now we are seeing that governments and nonprofit agencies are having difficulties getting bonds approved to finance large scale education and healthcare facilities, furthering the weak conditions across the construction industry.” The AIA data comes on the heels of a report released Tuesday morning by Environmental Data Resources Inc. that found a 17 percent annual decline in the number of environmental site assessments conducted across the U.S. in the third quarter. (see story) The index's worst reading was in the Western region, which registered a billings index of 34.9, while the Northeast region posted the strongest performance, at 44.3; note that even the best result here, however, represents shrinkage in billing hours at key design firms. By sector, commercial and industrial projects generated the fewest billing hours, with the billing index at 33.6 during October. Multi-family residential wasn't too far behind, with the component index hitting just 34.2 during the month. For more information, visit http://www.aia.org. Write to Paul Jackson at firstname.lastname@example.org.