Architecture billings are typically viewed as a leading indicator for the development industry. That's because, in order to build things, you need permits. And in order to get permits, you need architects to draw things.

So every month, the American Institute of Architects surveys design firms as a way to determine how the industry is doing. The primary question it asks is: Have your billings increased, decreased, or stayed the same in the month that just ended? Based on the proportion of respondents choosing each option, an Architecture Billings Index (ABI) score is created.

A score of 50 means there has been no change in billings from the previous month. A score above 50 indicates an increase. And a score below 50 indicates a decrease. Here's this score for August 2024 to August 2025:

Billings are down across the US. In fact, the survey notes that the value of design contracts has declined for an 18th consecutive month, marking the longest period of decline since the survey started 15 years ago. This is true across all regions, though the South has the best relative performance and the West has the worst. The commercial/industrial sector also appears to have the best relative performance, which, I'm only guessing, could be a result of things like data centers.

I don't have perfectly comparable data for Canada, but I know that architecture billings are way down in markets like Toronto and Vancouver. Architecture and development firms continue to lay off people, which is the strongest kind of indicator.

One of the things I always find interesting is how globally connected we all are. Real estate may be a local business, but it does depend on global capital flows and overall sentiment. The US market is soft. The Canadian market is soft — with some markets being largely shut off, to be more precise. And when I was in Paris last month, I heard a lot of the same from architects and developers (except from those able to subsist on government work).

Images: AIA / Detek ABI (August 2025)

Generally speaking, new homes tend to be priced higher than existing homes. This is, again generally, true because new homes are expensive to build, they're new and shiny, and because oftentimes they're pre-sold, meaning the purchase price reflects some future value.

But interestingly enough, this relationship has just flipped in the US, for the first time in at least 25 years. Here's the chart via Charlie Bilello:

This is, of course, a national average, and every submarket and product type is naturally going to have its nuances. Still, this inversion is noteworthy for a handful of possible reasons.

One, it points to softness in the new-home market. And indeed, homebuilder sentiment is down right now.

Two, it may suggest that homebuilders are building smaller, more affordable homes, which would bring down the median price.

And three, it's an indication of the "lock-in effect" that is prevalent in the US (but that is far less of a factor in Canada, where mortgages typically renew every few years).

For homeowners who are locked in at generationally low mortgage rates, there is a huge disincentive to sell. It would mean losing buying power. So why bother, unless you really have to?

This reduces the supply of existing homes on the market.

I'm excited to learn that the University of Pennsylvania Stuart Weitzman School of Design has just launched a new master's program that is intended to fill the gap in education between design and real estate development. It's called the Master of Science in Design with a concentration in Property Development and Design (or MSD-PDD).

From the sounds of it, it's an expansion of the certificate program in real estate development that I did while I was there. Good. It's also something that I've been advocating for at the University of Toronto for over a decade. We need more bilingual city-building professionals who understand both design and real estate development.

My initial comment is that I hope they're really drawing on and leveraging the resources of the Wharton School. That's what will really make this program stand out against many similar programs. When I was there, I remember them having two different real estate finance classes: one for MBAs and one for designers (which had been made deliberately easier).

I thought this was bullshit, so I met with the program coordinator and requested to be admitted to the MBA one. He strongly advised against it and said that it's, you know, really hard. But that only made me want to take it even more. I ended up getting an A.

So my piece of unsolicited advice for this nascent program is: don't baby the designers when it comes to business and finance. Because the market certainly won't.