For 33 consecutive years, Shinn Group has studied the financial and operational performance of private home builders. Over that time, the Comparative Financial and Operations Analysis has become something more than a collection of numbers. It is a historical record of how private builders have navigated changing markets, through challenges, adjustments, improvements, setbacks, victories and comebacks.

And if the 2025 results tell us anything, it is this: the market may have changed more than your financial statements reveal.

Like 2024, 2025 was a year of anticipation and uncertainty. Builders had to keep a close eye on sales, construction and operations while making adjustments to respond to changing buyer behavior and market conditions.

The Numbers Tell a Story

At first glance, some of the 2025 numbers may not look alarming. Participants maintained an impressive 30.07% average gross profit, up slightly from 29.90% in 2024. But beneath that number, pressure was building.

Overall profitability declined from 14.52% in 2024 to 13.38% in 2025. Why? Operating expenses increased another 1.08%, while average gross revenue declined 1.04%. The biggest contributor was the growing use of incentives. Builders were spending more to get buyers to the closing table at a time when the number of homes being sold was declining. The result was a 1.14-percentage-point decline in profitability.

Perhaps the most revealing statistic is the relationship between price and volume. The average sales price increased 5.22%, but the average number of units sold fell 10.48%. Higher prices could not compensate for the decline in volume, resulting in lower average gross revenue. In other words, selling homes for more did not necessarily mean making more money.

When Pricing Power Starts to Disappear

One of the major advantages builders have enjoyed during the current housing cycle has been a persistent shortage of new and existing homes. That shortage allowed builders to raise prices and absorb increasing discounts and concessions during 2023 and 2024.

But the dynamics began to change in 2025. Interest-rate reductions that many had anticipated did not materialize as expected. Meanwhile, new-home inventory ended the year at 7.6 months of supply. As inventory increased, builders' pricing power weakened.

Public builders continued to use significant discounts and incentives to generate sales, putting additional pressure on private builders to compete. For many companies, the question became less about what price can we get? and more about what will it take to get the buyer to say yes? That distinction matters. 
Because every incentive comes directly from the bottom line: a builder’s profit.

Inventory: An Opportunity, or a Warning?

Starts were down only 0.6% in 2025, but the bigger concern for some builders was what happened after the start. Excess finished, unsold inventory can quickly turn a profitable business into a cash-management problem. Carrying costs accumulate. Cash gets tied up. And as market conditions change, builders can find themselves forced to discount homes simply to generate liquidity.

That's why inventory strategy deserves more than a sales discussion. It deserves a cash-flow discussion. If your strategy calls for increasing inventory, you should also have a plan for how you will retreat if market conditions change. Strong profits provide the financial cushion necessary to weather that kind of storm.

The Next Challenge: Affordability

There is another important shift taking place. For much of the past decade, declining interest rates helped subsidize higher home prices by lowering buyers' monthly payments. That strategy became increasingly difficult in 2025.

With affordability under pressure, reducing the sales price (or redesigning the product itself) may become increasingly important for maintaining sales velocity. The challenge for builders is that this isn't simply a pricing issue. It may be a product, cost and operations issue.

What can you build that buyers can afford? How efficiently can you build it? How quickly can you build it? And how much margin can you preserve while doing so?

Those questions will become increasingly important as builders navigate 2026.

Where Does Your Company Stand?

The numbers above represent only a small portion of what is contained in the 2025 Comparative Financial and Operations Analysis. The study provides an in-depth look at the financial and operational performance of benchmark private builders, including operating expense trends from 2006 through 2025. It tracks each major operating expense category, showing how economic forces have affected those expenses, and how builders have responded.

The compensation section provides detailed information on compensation packages for 42 positions, offering another valuable benchmark for evaluating your company's people costs.

And perhaps most importantly, the study gives you something your own financial statements cannot: context. Your financial statements tell you what happened inside your company. Benchmarking helps you understand how those results compare with other high-performing private builders.

The participants in this study are Shinn Group consulting clients and/or builders who have attended at least one of our management seminars. As a result, the data should not be viewed as representative of the home building industry as a whole. In fact, many participants are high performers achieving above-average results. That makes the benchmarks particularly useful. Because the question isn't simply whether your company made money in 2025. The better question is: How did your company measure up?

Find out where your company stands (and where the opportunities may be hiding) in the 2025 Comparative Financial and Operations Analysis. Order your copy today and benchmark your company against some of the industry's strongest private builders.