ABI February 2026: Business conditions at architecture firms may stabilize soon

After several months of softness, architecture firm billings were close to flat in February

The AIA/Deltek Architecture Billings Index® (ABI) score for the month was 49.4, meaning that the share of firms reporting that billing declined was only slightly greater than the share of firms reporting that billings increased (a score of 50 would mean that those shares were equal). In addition, inquiries increased again this month, after declining slightly in January. And while the value of newly signed design contracts continued to decline, the pace of that decline slowed significantly. All these signs suggest that business conditions at architecture firms may be stabilizing, though ongoing global economic uncertainty may make that short-lived.

Business conditions remained flat at architecture firms located in the South for the second consecutive month in February but continued to decline at firms located in other parts of the country. Billings were particularly soft at firms in the Northeast, most likely due to the recent parade of winter storms that have hit the region. Firms across all specializations continued to experience declining billings this month, but the share of firms with an institutional specialization reporting declining billings decreased, as billings at those firms approached flat.

This month, we introduced a new question that we will ask quarterly going forward. The new question asks firm leaders their sentiment about how they think their firm’s gross billings/billable work in the next quarter will compare with the current quarter. Overall, nearly half of responding firm leaders this month (48%) indicated that they expect that billings will remain about the same in the second quarter of 2026, as compared to the first quarter. However, nearly one third (31%) indicated that they expect that their billings will increase by 5% or more, while 21% expect that their billings will decrease by 5% or more. Large firms with annual billings of $5 million or more (39%), firms located in the Midwest (38%) and South (36%), and firms with a commercial/industrial specialization (36%) were most likely to anticipate an increase in their billings in the coming months. Conversely, firms with annual billings of less than $1 million (28%) and those located in the Northeast (27%) were most likely to expect their billings to decline in the second quarter.

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Conditions remain week in the broader economy

Despite some encouraging signs in the ABI data, conditions in the broader economy remain fairly soft. Total nonfarm payroll employment declined by 92,000 positions in February, erasing nearly all of the gains that were made in January. However, architectural services employment held steady in January at 204,600 (the most recent data available) and remains nearly 2,000 positions above its level one year ago.

In addition to a decrease in total employment, inflation increased from January to February, with the Consumer Price Index (CPI) rising 0.3% and 2.4% year over year. Higher costs for shelter, food, and energy drove the increase. And energy prices are likely to rise again in March, once the impact of the war in Iran is realized.

More than one-third of firms have increased their professional liability insurance in the last three years

For this month’s special practice questions, we asked firm leaders about recent trends in professional liability insurance at their firm. Overall, nearly eight in 10 responding firm leaders (79%) reported that they carry firm-wide professional liability insurance, while 25% report that they carry firm-wide coverage and supplemental coverage for specific projects, and 1% report that they do not carry any coverage (multiple responses were permitted).

At firms that carry firm-wide coverage, 63% reported that their coverage has remained the same over the last three years. However, more than one-third (36%) reported that their coverage has increased in the last three years. Large firms with annual billings of $5 million or more were most likely to report that they have increased coverage (48%), followed by firms located in the South (42%), and firms with an institutional specialization (42%). Just 1% of responding firm leaders reported that firm-wide coverage has decreased in the last three years, which was most common among small firms with annual billings of less than $250,000 (5%).

At firms that carry project-specific coverage, slightly more than half of responding firm leaders (53%) reported that their coverage has remained the same in the last three years, while 30% reported that their coverage has increased. Firms located in the South (39%) and West (36%), and firms with a multifamily residential specialization (37%) were most likely to report that coverage has increased. In addition, 6% of responding firm leaders reported that their project-specific coverage has declined in the last three years, while 3% reported that their coverage has been eliminated.

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This month, Work-on-the-Boards participants are saying:

• “Our offices are slow as health systems struggle with profitability and advancing capital projects.”—100-person firm in the Northeast, institutional specialization
• “Still soft. Clients are more cautious about conditions in the local market due to tariffs, construction labor, and political unrest.”—21-person firm in the Midwest, multifamily residential specialization
• “Remain steady. Have seen some signs of increased opportunities.”—40-person firm in the South, commercial/industrial specialization
• “Flat except for government/military projects.”—37-person firm in the West, mixed specialization