ABI October 2025: Billings continue to decline at architecture firms

Business conditions at architecture firms remained soft to start the fourth quarter of 2025

The ABI score of 47.6 for October indicates that fewer firms reported declining billings this month than in September, when the score was 43.3. In addition, inquiries into new projects increased significantly this month, with the largest share of firms in a year and a half reporting an increase. On the other hand, the value of newly signed design contracts decreased yet again, as projects remain smaller and clients remain hesitant to commit.

Billings softened at firms in all regions of the country in October, except for those in the Midwest, where they were essentially flat for the second consecutive month. Business conditions remained softest at firms located in the West, while the pace of the decline in billings held steady at firms located in the Northeast. Firms located in the South saw conditions weaken further this month, after approaching growth over the summer. The billings decline also accelerated this month at firms with a commercial/industrial specialization, returning to levels seen at the beginning of the year after approaching growth in the third quarter. And conditions remain soft overall at firms with institutional and multifamily residential specializations.

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Interest rates continue to decline

Due to the recently ended government shutdown, little economic data has been available since late September. However, the government did release September inflation data in late October. That report showed that the Consumer Price Index (CPI) increased by 0.3% from August for an average annual increase of 3.0%, the highest level since January. Despite some moderation in other energy prices and in food prices, gasoline prices increased and were the primary contributor this month. Due to pervasive inflation, the Federal Reserve decided to lower interest rates by another 0.25% at its meeting on October 29. They may make one additional rate cut at their December meeting, but they may have to make their decision without any hard data, due to the length of the shutdown.

Fewer projects on the horizon are likely to lead to softer billings this year and next

This month, we asked architecture firms about their revenue expectations for 2025 and their outlook for 2026. On average, responding firm leaders expect their net revenue this year to decline by 1.2% compared to 2024. Nearly four in ten (38%) expect revenue to decline, versus nearly one third (32%) that expect revenue to increase, and 30% that expect it to remain about the same as last year. Firms located in the Midwest expect modest growth of 2%, while large firms with annual billings of $5 million or more expect growth of just 1%. Conversely, small firms with annual billings of less than $250,000 expect revenue to decline by an average of 7% this year. Nearly half of firms (46%) say that their current estimate for net revenue at their firm is less than their expectations at the beginning of the year, although 20% say that their revenue is in excess of expectations, most notably large firms, those in the Midwest, and those with a multifamily residential specialization.

When looking ahead to 2026, most firms project that their net revenue will be flat, declining just 0.9% on average. Firms located in the Northeast and small firms expect the largest decreases, of 3% and 8%, respectively. Large firms and firms with a multifamily residential specialization project very slight growth, of 0.5% and 0.6%, respectively.

At firms that project an increase in revenue in 2026, 43% rated current project backlog suggests growth for next year as a major factor for that projection, followed by 35% that rated projects that have been delayed or stalled are expected to be restarting as a major factor, and 33% that said that getting a higher level of inquiries for new projects is a major factor. Being fully staffed and able to increase billings and slowing construction market taking pressure off of construction labor and materials prices were rated as not being a factor by 57% and 42% of respondents, respectively.

At firms projecting a decrease in revenue for 2026, nearly three-quarters (70%) rated current projects winding down, and fewer new ones on the horizon as a major factor, while 63% rated uncertain economic conditions are discouraging potential clients from pursuing projects as a major factor. Despite the government shutdown’s impact at the time of the survey, 41% said that they do not expect the longer-term impacts to be a major factor in declining revenue in 2026.

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

• “The Northeast remains incredibly difficult to develop in due to increased requirements on affordable units and high construction costs in Boston, and low margins and lack of infrastructure (power/sewer) to support new developments outside the city. We have been working to diversify outside the Northeast in order not to be tied to local conditions.”—55-person firm in the Northeast, institutional specialization
• “We are starting to see many projects shake loose in the multifamily sector.”—40-person firm in the Midwest, residential specialization
• “Still seems to be strong, as the area keeps getting companies moving into the state from other states, which increases the need for housing, retail, etc.”—43-person firm in the West, commercial/industrial specialization
• “Okay, today, but in six months, we have concerns.”—27-person firm in the South, institutional specialization