h few extras persist in home-design trends, but they are becoming less dominant as the housing market indicates the beginning of a thaw, according to a recent survey by the American Institute of Architects.

There are indications that the falling home sizes that began during this downturn may be finally hitting bottom, the organization says.

Business conditions at residential architecture firms have been spiraling downward since the middle of 2007. The billings index for residential architecture firms during the first quarter of 2011 was the strongest reading since the middle of 2007.

While some of this strength is due to traditional seasonal trends, there is evidence that an emerging upturn can be sustained, the AIA says. Project backlogs, the amount of time current staff can be kept fully employed with design work that is currently in-house, remain weak but appear to be trending up.

Also, except for homes aimed at first-time buyers, homes at all the major price points are seeing more moderate conditions as compared to a year ago. In addition, home improvement projects, which make up a growing share of workloads at many residential architecture firms, are reported as improving by the majority of firms serving these segments.

Declines in home size moderating

During the run-up in housing prices through the middle of this past decade, home sizes increased quite dramatically. In the AIA's first Home Design Trends Survey for the first quarter of 2005, almost a third of respondents reported home sizes to be increasing, while just 17 percent reported declines. Since 2005, however, a rising share of respondents reporting declining home sizes. By the 2010 first quarter survey, almost 60 percent of respondents reported declining home sizes, while fewer than 3 percent indicated that they were increasing.

However, the 2011 first-quarter survey finally suggests that this trend is moderating. Respondents who reported home sizes to be decreasing fell to 52 percent, while 5 percent indicated that sizes are rising. While this doesn't suggest that home sizes are suddenly and dramatically increasing, it does indicate that the pace of decline has slowed. Residential architects are reporting a similar trend for the volume of homes, as the share reporting declines fell from 21 percent to 18 percent. Until home prices begin to accelerate, it's unlikely that homes sizes and volumes will show significant gains.

Declines in homes sizes at the upper end of the market appear to be stabilizing ahead of more affordable, entry-level homes. In most markets across the U.S., lower-priced homes have fallen further percentage-wise during the housing recession, and as a result, a high share of distressed properties are at the lower end of the new home price spectrum. Buyers of upper-end custom and luxury homes, therefore, may be a bit less nervous about further price declines.

As of the first-quarter survey, 8 percent of respondents reported the size of upper-end homes to be increasing, while 40 percent indicated continued decreases. For entry-level homes, only 5 percent reported increasing sizes, while 47 percent reported further declines.

Reflecting the desire to keep homes affordable in the current weak housing market, home layouts have generally been simpler and floor plans more flexible.

The one general exception to this trend is continued interest in accessibility into and around the home. As our population ages and people prefer to age in their current home, accessibility has become a growing concern. As a result, in-home accessibility was observed to be increasing in popularity by 58 percent of residential architect respondents, basically unchanged from a year ago.

Accessibility into and out of the home was another design priority seen as growing in popularity by almost half of the respondents. A single-floor design is yet another consideration typically favored by households with accessibility concerns.

An open-space layout also is growing in popularity. With more pressure on space in the home, interest has grown in designing homes with more open space that gives the household more flexibility.

Residential architects have been reporting weak business conditions since mid-2007, with very steep declines in late 2008 and early 2009. Since that time, the pace of decline has slowed, with a jump in the first quarter of 2010 that coincided with the expiration of the federal first-time homebuyer tax credit. Billings finally began showing stronger gains in the first quarter of this year. Inquiries for new projects, likewise, generally have been trending up in recent quarters.

However, these reports on business conditions aren't adjusted for seasonal variation, and the first quarter of the year is generally a busy quarter for residential architecture firms. Soon, it will be more obvious if the residential design and construction industry is entering into a sustainable recovery.

As workloads at residential architecture firms have evaporated, so have project backlogs. Backlogs were averaging more than five months at the peak of the housing boom, but gradually declined through 2007 and 2008, running below three months for most of 2009 and 2010. However, project backlogs may finally be moving out of this downturn. For the first quarter of 2011, backlogs averaged three months, up from 2.7 months a year ago.

Business conditions generally are trending positively in all regions of the country.

In spite of recent signs of improvement, residential architects are still reporting net declines in all of the new construction sectors, the AIA says. However, except for homes oriented to first-time buyers, the pace of decline has eased over the past year.

The townhouse and condominium sectors, as well as the second- and vacation-home sectors, are particularly weak at present. For second homes, more than 60 percent of respondents report weakening conditions, compared with only 10 percent reporting improving conditions. For condos, the figures are 46 percent reporting weakening conditions and just over 12 percent reporting improving conditions.

In contrast, residential architects are extremely positive about the interest in improving existing homes. More than 60 percent of respondents report that improvements for addition and alteration projects are increasing, with only 10 percent reporting declines. Household interest in kitchen and bath remodeling is reported as even more favorable.