Architecture firms are flirting with growth for the first time in three years — but the leading indicator still points to further multi-family weakness ahead.

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DESIGN DEMAND: THREE YEARS OF CONTRACTION, ONE INCH FROM THE EXIT

McBride flags the March Architecture Billings Index (ABI) reading of 49.8 — the closest the index has come to the 50-point expansion threshold since early 2023, and a signal that has now sat in contraction territory for 41 of the last 42 months. The ABI leads non-residential construction activity by 9–12 months, meaning today's near-flat readings are shaping the construction pipeline well into 2027.

The headline number masks some genuine green shoots. New project inquiries rose steadily, and firm backlogs climbed to 6.6 months — the highest since December 2023. Notably, multifamily residential backlogs expanded from 5.4 to 6.2 months between December and March, and multifamily billings ticked into slight positive territory (50.9) — breaking a 43-consecutive-month streak below 50.

The catch: design contracts declined for the 25th consecutive month, and the pace of that slowdown worsened from February. That's the pipeline signal that matters most for near-term starts. McBride's read is direct — this data suggests "we will see some further weakness in multi-family starts," which has implications for an already supply-constrained housing market.

Regional divergence is sharp. The West (50.6) posted its first billing increase since December 2024, while the Northeast (44.2) is meaningfully lagging. The South (48.5) remains soft despite its outsized role in new housing supply. At the sector level, institutional (52.6) and commercial/industrial (52.5) are both expanding, while the catch-all "mixed practice" bucket (40.7) is the weakest link.

The AIA's chief economist, Richard Branch, offered cautious framing: billings "could soon see positive growth for the first time in three years," but flagged geopolitical risk (Iran conflict, labor shortages) as material headwinds to any recovery.

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CLOSING SYNTHESIS

The ABI near-50 reading is an inflection signal worth watching — not a recovery call. Three years of contraction has hollowed out the multi-family pipeline, and even if billings flip positive in coming months, the 9–12 month lag means construction activity stays soft through most of 2026. For a housing market starved of inventory, that's another quarter of supply not arriving. The backlog uptick in multifamily is the one data point that earns cautious attention; everything else says the production pipeline remains under pressure.

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TL;DR - Architecture billings hit 49.8 in March — closest to expansion in 3 years, but still in contraction for 41 of the last 42 months, signaling continued CRE construction softness through 2026 - Multi-family billings turned slightly positive (50.9) after 43 consecutive months below 50, but design contracts declined for a 25th straight month — the pipeline remains weak - Regional split is widening: the West finally returned to growth (50.6) while the Northeast (44.2) lags badly, and the South (48.5) — the nation's most active housing market — stays soft - Firm backlogs at 6.6 months (highest since Dec 2023) offer a glimmer, but McBride's bottom line is clear: expect further weakness in multi-family starts ahead

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• Bill McBride (1)