The housing market has evolved and changed over the past few years as builders adapted to new challenges. From an ongoing housing and labor shortage to the continued rise of home prices and mortgage rates, builders have had to keep a watchful eye on the market for changing conditions.

Shinn Group, a home building consulting firm, recently released its Comparative Financial and Operations Analysis for 2025, which looks at current market conditions and the impact they have on construction activity, home sales, prices, and more. 

Profitability was down in 2025

Despite builders maintaining a 30.07% average gross profit, the report found that overall profitability declined from 14.52% in 2024 to 13.38% in 2025. At the same time, operating expenses increased another 1.08%, while average gross revenue declined by 1.04%.

The decline in profitability was also due to less home sales. While average sales prices grew by 5.22%, the number of units still fell by 10.48%. 

Less demand caused builders to rethink their sales strategies

For much of the past decade, declining interest rates helped subsidize higher home prices by lowering buyers' monthly payments, but that strategy became harder to employ as rates grew. In order to sell homes, builders instead turned to sales incentives and price cuts.