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NAHB’s Own Numbers Say the Top Quartile Nets 17.7%.
The Bottom Quartile Loses Money.
For the $2 to $5M single-family builder budgeting next year this month: where your net margin sits against NAHB’s latest Cost of Doing Business Study, and what the top 25% do differently.
Cost of Doing Business
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The one number to put yours against
2023 was the best margin year NAHB has recorded in more than three decades. Average net profit hit 8.7%. The bottom 25% of builders still averaged a loss.
That’s the number to sit with before you build next year’s budget. Not the average. The spread.
NAHB’s Cost of Doing Business Study, 2025 edition, puts the average single-family builder at 20.7% gross and 8.7% net for 2023. The top 25% ran 29.7% gross and 17.7% net. The bottom 25% ran 17% gross and lost 1.4 cents on every dollar. Same year. Same rates. Same lumber.
Here’s the part most operators miss. Subtract net from gross in each bracket. The result is what the bracket spends between the two. The average builder: 12.0 percentage points. The top quartile: 12.0 points. The bottom quartile: 18.4 points. The whole gap between average and top quartile lives in the jobs. Overhead is a wash.
Now add October’s HMI. 43% of builders cut prices last month, the highest share NAHB has recorded in the 2020 to 2026 period. The average cut held at 6% for the seventh straight month. Take six percentage points off each bracket’s gross. The average builder’s net drops to 2.7%. The bottom quartile goes to a 7.4% loss. The top quartile lands at 11.7%, still three points above where the average builder started. That’s illustrative arithmetic, treating the cut as a straight deduction from gross at 2023 benchmark levels. The direction is real.
Where you sit
Take fiscal 2025, or the trailing twelve months. Net profit before tax, divided by revenue. Owner’s comp counts as an expense, the way NAHB counts it. Find your bracket.
What it usually looks like at $3M: gross margin in the high teens, and nobody can say which job dragged it there. Estimating is a markup on last time. Change orders get done and billed later, or done and forgotten. Mostly forgotten. Overhead creeps because the office is covering for the field. At the bottom quartile’s 17% gross, a $3M builder clears $510,000 before overhead and finishes the year $42,000 in the hole. If that’s close to home, that’s one slow quarter from a loss. And 2023 was a fast year.
The move: gross profit per project, run weekly. Contract value minus spent minus still to spend, every job, every Friday. Until the job that lost the margin has a name, nothing gets fixed. At $3M, that’s you. At $7M your PMs bring it to Monday’s meeting and you read it.
What it usually looks like: a profitable company that can’t say why. Good months and bad months come from the market, not from anything that changed inside. Pricing is set to win. Margin gets protected in the field. If at all. At $3M, the average bracket is $621,000 of gross and $261,000 of net. The 6% price cut that 43% of builders took last month would take that to 2.7% net overnight.
The move: break-even and required gross margin, in writing, before the next job gets priced. Overhead divided by target margin equals the volume you must sell before a dollar is yours. At NAHB’s 12.0% average overhead, a $3M builder carries $360,000. Divide by 20.7% and break-even is $1.74M in sales. The rest is the year.
What it usually looks like: a company that knows its ideal project and turns down the rest. Allowances framed as the floor, not the finish. A good, better, best deck at framing-complete. Deposits and payment terms set by job size. The owner reads the number; someone else produces it. At $3M, this bracket is $891,000 of gross and $531,000 of net.
The move: define the ideal project from the last twelve months of jobs. Audit revenue by spend bracket and by plan. If 60% of revenue is one plan, that plan’s margin is the company’s margin. Know it on its own. The average hides the loser.
At $3M in revenue, the gap between the average builder and the top quartile is $270,000 of net profit a year. Nine percentage points, same year, same market.
SBGP reviews your job costing, your margin tracking, and the process that produces both, and builds a step-by-step 12-month plan across Finance and Processes, so you can name the job that lost the margin before it costs you the quarter.
The Bottom Line
NAHB’s own study puts the spread between the top and bottom quarter of builders at 19.1 percentage points of net margin. In 2023. Strongest year in three decades. Everybody had the same market. The spread came from whether the owner could see the jobs.
NAHB’s Rose Quint wrote in March 2025 that incentives and price cuts likely shrank margins in 2024. October’s HMI says they’re still shrinking. The builders who hold margin through it will be the ones who knew their number on a Friday, not in April.
The top quartile isn’t running a leaner company. It’s running fatter jobs.
A BPA from SBGP is a 30+ page, step-by-step 12-month plan built specifically around your operation. SBGP analyzes your financials, your marketing and sales process, your hiring and team communication structure, and your strategic positioning, and delivers a personalized, time-based roadmap. It starts with the number this article asked you to find, and it ends with the weekly system that keeps it in front of you. DISC Profile and Motivational Assessments for you and up to five members of your management team are included.
✓ Operations
✓ Finance & Tracking
✓ People & Role Clarity
Sources: NAHB Cost of Doing Business Study, 2025 edition · Eye on Housing, March 2025 · NAHB/Wells Fargo HMI, October 2026
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