Demand for architectural design drops in April

Demand for architectural design fell in April to the lowest point of the year. The Architecture Billings Index, which indicates construction volume, decreased marginally to 47.6 in April from 50.5 in March, according to American Institute of Architects data released Wednesday. The benchmark for the index is 50. Anything above that indicates an increase in architectural billings and anything below indicates a decrease. The AIA surveys a panel of member firms monthly, asking if billings increased, decreased, or stayed the same. The national association then weighs the responses for the index. April was the first month in 2011 the index swung below 50. The sharp decline in demand for architectural services has analysts scratching their heads. Kermit Baker, chief economist at AIA, said he is unsure whether to attribute the drop to an industry-wide reversal in demand for design or a bump in the road. “The fact that most construction projects funded under the federal stimulus program have completed their design work, the anxiety around the possibility of a shutdown in the federal government in April, as well as the unusually severe weather in the Southeast had something to do with this falloff,” Baker said. “However, the majority of firms are reporting at least one stalled project in-house because of the continued difficulty in obtaining financing.” Baker also echoed Redwood Trust (RWT) CEO Martin Hughes’ sentiment when he said financing continues to be the main roadblock to recovery. Hughes testified before the Senate Banking Committee Wednesday. The new projects inquiry index also experienced a sharp drop in April, falling to 55 from 58.7 a month prior, according to AIA. The regional buildings index was highest in the Northeast at 51.2, followed by the Midwest at 51.1, the South at 48.3, and the West at 47.7. The index was the highest in the multifamily residential sector (53.9) followed by the commercial/industrial sector (49.9), the institutional sector (45.9) and the mixed practice sector (45.2). Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.