2025 Financial Study Results
The 2025 Comparative Financial and Operations Analysis for home builders marks the thirty-third consecutive year Shinn Group has conducted the study. Throughout the years, we have accumulated a landmark historical record of home building companies’ financial and operational performance: the challenges, the changes, the adjustments, the improvements, the victories, the defeats and the comebacks.
I am honored to have our participants’ trust in accessing the most sensitive information from their companies. I thank all of our clients and followers for their continued participation and support. This year marks my first year analyzing this data without Emma Shinn. I have been involved with the study for several years and promise to continue to uphold our confidentiality commitment to all participants as well as our methodology.
We are very proud of our clients and followers, who throughout the years have demonstrated a commitment to excellence in operations, elevating their management systems and practices to achieve superior quality, customer satisfaction and profitability. This last year is a testament to the discipline and hard work these builders put in to maintain superior profits in the face of adversity.
The Net Profit Averages chart shows the trajectory of the industry’s profitability from 1994 to 2025. Much like 2024, 2025 continued to be a year of anticipation and uncertainty, requiring a watchful eye and continued adjustments to sales, construction and operational strategies.
The builders in our sample group remained vigilant, responding timely to the multiple challenges occurring during the year. As expected, profitability was impacted and reduced from 14.52 percent in 2024 to 13.38 percent in 2025. Participants showed discipline in maintaining an average gross profit of 30.07 percent, a slight increase from 29.90 percent in 2024. However, operating expenses increased again in 2025 by 1.08 percent, resulting in the loss in profitability of 1.14 percent.
From 2024 to 2025, average gross revenue declined by 1.04 percent. The average sales price increased by 5.22 percent, while the average number of units sold decreased by 10.48 percent, causing a decrease in average gross revenue.
The significant change between 2024 and 2025 was the increase in incentives, causing an increase in operating expenses. Compounding the issue, the number of units closed in 2025 did not generate enough revenue to maintain the operating expenses to revenue ratio.
In 2025, starts were down 0.6 percent. And although the operating expense ratio was below target, this is a warning sign for builders to evaluate their operations in order to maintain profitability. Strong profits allow builders to weather the storm.
The House Prices / Interest Rates chart illustrates average sales prices and interest rates from 1972 to 2025, showing the trajectory and impact of interest rates on the housing market. The advantage the housing market has had during the present cycle versus what happened in the 2007-2009 cycle has been the lack of new homes inventory and the high demand for housing in the marketplace, coupled with a lack of existing homes for sale.
The combination of these factors allowed builders to continue to increase prices and absorb increases in discounts and concessions for buyers during 2023 and 2024. However, in 2025, interest rate decreases did not materialize, and new homes inventory finished the year at 7.6 months of supply. The increase in inventory weakened builders’ pricing power. That, combined with heavy discounting and incentives from public builders, forced many private builders to play the pricing game to motivate buyers and close sales, causing profits to drop 1.14 percent.
As indicated in the Net Profit by Volume chart, along with analysis of results over the last five years, smaller builders appear to be less prepared and have less resources available to help them overcome challenges during industry downturns. Therefore, they need to be better prepared and have contingency plans in place to adjust more rapidly and efficiently to economic decline. However, it is important to note that builders of all sizes are achieving superior profits of over 10 percent. Repeating what we say year after year, size is not a requirement to achieve superior profits. Effective management processes are the key driver of superior profits.
Emma Wildermuth
President, Shinn Group
For an in-depth look at the results of the study, including compensation packages and benefits for 42 different positions,
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