Architecture firms reported increasing demand for design services in June according to a new report from the American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score for June remained at an elevated level of 57.1 (any score above 50 indicates an increase in billings).The new design contracts score also remained positive at 58.9 but was not quite as strong as the 63.2 reading in May. New project inquiries logged another near-record high score at 71.8, compared to 69.2 in May.

The regional and sector categories are calculated as a three-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

Dodge Momentum Index Loses Steam in June

Following six months of consecutive gains, the Dodge Momentum Index fell to 165.8 (2000=100) in June, down 5% from the revised May reading of 175.1. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The decline in June resulted from losses in both institutional planning, which fell 7% and commercial planning which lost 4%.

Uncertain demand for some building types (such as retail and hotels), higher material prices, and continued labor shortages weigh down new project planning. However, even with June’s decline, the Momentum Index remains near a 13-year high and well above last year. Compared to a year earlier, both commercial and institutional planning were significantly higher than in June 2020 (39% and 46%, respectively). Overall, the Momentum Index was 41% higher.

Total Construction Starts Slip in June

Dodge Data & Analytics reported total construction decreased 7% in June, slipping to a seasonally-adjusted annual rate of $863.6 billion. Single-family housing starts are feeling the detrimental effects of rising materials prices, according to the report, and large projects that broke ground in May were absent in June for nonresidential building and nonbuilding starts, resulting in declines.

Nonresidential building starts dropped 7% in June to a seasonally-adjusted annual rate of $288.0 billion. Large health care and manufacturing projects provided a significant boost to May, but the absence of similar projects in June led to normalized starts activity. Without the negative influence of these sectors, nonresidential starts would have increased 10% in June. Commercial starts rose 12% with all categories posting gains, while institutional starts fell by 9% and manufacturing starts lost 62% over the month. Through the first six months of 2021, non-residential building starts were slightly ahead of the first six months of 2020. Commercial starts were up 7% and manufacturing starts were 36% higher, while institutional starts were 5% lower through the first six months.

Residential building starts fell 5% in June to a seasonally-adjusted annual rate of $403.8 billion. Single-family starts lost 8%, while multifamily starts were 2% higher. From January through June, total residential starts were 32% higher than the same period a year earlier. Single-family starts were up 37%, while multifamily starts were 19% higher.

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