Business Conditions Begin to Improve

Business conditions at residential architecture firms have been spiraling downward since the middle of 2007, according to Kermit Baker, AIA chief economist. The billings index for residential architecture firms during the first quarter of 2011 was the strongest reading since the middle of 2007. While some of this strength is due to traditional seasonal trends, there is evidence that an emerging upturn can be sustained.

Residential architects have been reporting weak business conditions since mid-2007, with steep declines in late 2008 and early 2009. Since that time, the pace of decline has slowed, with a jump in the first quarter of 2010. This coincided with the expiration of the federal first-time homebuyer tax credit.

Billings finally began showing stronger gains in the first quarter of this year. Inquiries for new projects, likewise, have generally been trending up in recent quarters. However, these reports on business conditions are not adjusted for seasonal variation. The first quarter of the year is generally a busy quarter for residential architecture firms. By summer, it will be more obvious if the residential design and construction industry is entering into a sustainable recovery.

- Courtesy of AIA