Conditions in the design and construction industry may be looking up according to recent reports by the American Institute of Architects (AIA) and the U.S. Census Bureau. However, this activity simply could be a continuation of the pattern of peaks and valleys that has reflected overall economic conditions for most of the past year.
The latest New Residential Construction Report released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development shows improvements in new residential construction in March, ending a two-month slump. The report showed that permits for privately owned housing units increased by 7.5 percent in March to a seasonally adjusted annual rate of 685,000, up from February’s revised rate of 637,000. Year-over-year, this shows a 34.1 percent improvement. Single-family permits increased 5.6 percent over the previous month to a rate of 543,000, and permits for units in buildings of five or more units rose to a rate of 120,000, a 13.2 percent improvement over February.
While approvals increased significantly, actual housing starts showed only moderate improvements. Single-family housing starts declined by 0.9 percent in March, but overall starts of privately owned housing increased 1.6 percent over the previous month to a seasonally adjusted annual rate of 626,000. Starts of units in buildings of five or more units increased by 39.7 percent.
Conversely, single-family completions rose 5.9 percent from February to a rate of 486,000 in March, while overall completions of privately owned housing declined 3.1 percent to a rate of 656,000. Completions of units in buildings of five or more units dropped by 23.7 percent.
Demand for architectural services and design is improving slightly, as well. Following February’s 2-point increase in architecture billings, the AIA’s Architectural Billings Index (ABI) increased again in March by 1.3 points, scoring 46.1. While this reflects a continuation of the overall decline in demand for architecture services, the AIA notes that it also is the highest score since August 2008. Inquiries for new projects scored 58.5, a significant increase over February’s 52.0 new projects inquiries index.
“This is certainly an encouraging sign that we could be moving closer to a recovery phase, even though we continue to hear about mixed conditions across the country,” said Kermit Baker, Ph.D., Hon. AIA, chief economist for the AIA, in a press release. “This increasing volatility is often a sign that overall business conditions may begin to change in the coming months.”
While the multifamily residential sector’s January score of 50.1 indicated the strongest performance of all the design sectors measured in the ABI, it fell in February to a score of 47.3 and remained at that level through March.
The regional ABI breakdown shows the Midwest continuing to lead with a score of 50.5, up from 48.0 in January, followed by the Northeast at 47.0, the West at 46.0, and the South at 44.4. Every region saw increases in billings over the previous two months.
