What profit margin do custom home builders make?

NAHB Eye on Housing reports an average gross profit margin of 20.7% and an average net profit margin of 8.7% for fiscal 2023, on average revenue of $11.3 million. NAHB's separate construction-cost survey reports profit as 11.0% of the sale price of a typical newly built house, before tax.

What is a normal markup for a home builder?

NAHB's reported average gross margin for fiscal 2023 was 20.7%, which it records as the highest since 2006, with the long-run pre-tax profit share of sale price standing at 9.8% since 1998. Gross margin and profit share are different measurements, so check which one a quoted figure refers to before comparing it to anything.

Does the builder's markup include the general contractor fee?

They are different things. HomeGuide publishes a general contractor fee of 10% to 20% of the construction budget for managing the project and says builders usually include it in the total price. NAHB's 11.0% profit share is what is left after construction cost, lot, overhead, commission, financing and marketing.

Can I ask a builder what their markup is?

You can, and on a cost-plus contract you should, because NAHB describes cost plus as time and labor plus a percentage markup on materials without publishing a standard percentage. On a fixed bid the margin is inside one number, and the more useful question is which lines are allowances and which are specifications.

What is the markup on a custom home builder?

Published August 22, 2026

NAHB's 2024 survey puts builder profit at 11.0% of a new home's sale price, and its business survey puts the average gross profit margin at 20.7%.

There are two honest answers to this question and they are different sizes because they measure different things. NAHB's Cost of Constructing a Home survey breaks the sale price of a typical newly built single-family house into seven parts and reports profit as 11.0% of it, before tax. Its Cost of Doing Business study looks at the builder's whole company rather than one house, and reports an average gross profit margin of 20.7% and an average net profit margin of 8.7% for fiscal 2023. A gross margin is what is left after the cost of the houses; a net margin is what is left after running the business as well.

Sources: NAHB, NAHB Eye on Housing

This page is general information, not professional advice, and it is not legal advice. Contracts, prices and licensing rules differ by state and by builder, and the only terms that bind anyone are the ones in the document you sign.

Where the money in a new home's price actually goes

Component	Average	Share of price
Total construction cost	$428,215	64.4%
Finished lot	$91,057	13.7%
Profit, before tax	$72,971	11.0%
Overhead and general expenses	$38,248	5.7%
Sales commission	$18,955	2.8%
Financing cost	$10,220	1.5%
Marketing cost	$5,633	0.8%
Total sale price	$665,298	100%

NAHB's published breakdown of the average sale price of a newly built single-family home, from its 2024 Cost of Construction survey.

Source: NAHB

Two things in that table are worth holding on to. The first is that construction cost reached 64.4% of the sale price in 2024, up from 60.8% in 2022, which NAHB records as a high for a series that began in 1998. The second is that the 11.0% profit line is a pre-tax figure for the whole company's typical house, and NAHB notes the long-run average of that share since 1998 stands at 9.8%. So the profit share in the most recent survey is above its own long-run average, not below it.

Source: NAHB

What percentage do custom home builders charge?

If the question is what appears on a bid rather than what a builder earns, the number people are usually looking for is the general contractor fee. HomeGuide publishes that at 10% to 20% of the construction budget on its Texas page, and says most home builders include the fee in the total cost of the build rather than showing it as a separate line. That is a fee for managing the project, not the builder's profit, and the two are frequently confused in the same conversation.

Source: HomeGuide

On a cost-plus contract the markup is explicit and negotiable. NAHB describes cost plus as the contractor basing their estimate on the time and labor to build the house plus a percentage markup on all the material that goes into it, and says it is used where costs are harder to predict. It does not publish a standard percentage, which means the number on your contract is a number your builder chose. Ask what it is, ask what it is charged on, and ask whether it applies to labor as well as materials.

Source: NAHB

A markup is not a fee added to the end of a bid you can strike out. On most contracts it is already inside the price, which is why asking to see it is a better question than asking to remove it.

Why builders' margins are where they are

NAHB Eye on Housing reports that builders averaged $11.3 million in total revenue for fiscal 2023, of which about $9.0 million — 79.3% — went on cost of sales, meaning land and direct and indirect construction costs. Operating expenses took another $1.4 million, or 12.0% of revenue. It records the 20.7% gross margin as the highest since 2006 and the 8.7% net margin as the highest in the survey's recent history, and it adds its own caution: increased use of incentives such as mortgage rate buydowns, and cuts in home prices, are likely to have shrunk that margin in 2024.

Source: NAHB Eye on Housing

For context on where that sits historically, NAHB records the gross margin at a low of 14.4% in 2008 during the housing recession, recovering to 19.0% by 2017 and dipping to 18.2% in 2020 as COVID-19 pushed costs up. The 2023 reading is the top of a range that has moved between roughly 14% and 21% across nearly two decades.

Source: NAHB Eye on Housing

What this means for your quote

A builder's margin is not the lever with the most travel in it. NAHB's own breakdown puts construction cost at 64.4% of the price and profit at 11.0%, so the specification moves your number further than the negotiation does.
Ask which contract type you are being quoted on before you ask about the markup, because on a fixed bid the markup is inside a single number and on cost plus it is a stated percentage.
Ask what the general contractor fee covers. HomeGuide's 10% to 20% is for managing the project, and it is usually already in the total.
Compare bids on the same specification. Two builders with identical margins can hand you very different numbers because they priced different tile.

Ask three builders to price the same house and the margin question answers itself. These are the custom home builders AI assistants actually name when homeowners ask. Nobody can pay to be on these lists.

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Questions people ask next

What profit margin do custom home builders make?: NAHB Eye on Housing reports an average gross profit margin of 20.7% and an average net profit margin of 8.7% for fiscal 2023, on average revenue of $11.3 million. NAHB's separate construction-cost survey reports profit as 11.0% of the sale price of a typical newly built house, before tax.
What is a normal markup for a home builder?: NAHB's reported average gross margin for fiscal 2023 was 20.7%, which it records as the highest since 2006, with the long-run pre-tax profit share of sale price standing at 9.8% since 1998. Gross margin and profit share are different measurements, so check which one a quoted figure refers to before comparing it to anything.
Does the builder's markup include the general contractor fee?: They are different things. HomeGuide publishes a general contractor fee of 10% to 20% of the construction budget for managing the project and says builders usually include it in the total price. NAHB's 11.0% profit share is what is left after construction cost, lot, overhead, commission, financing and marketing.
Can I ask a builder what their markup is?: You can, and on a cost-plus contract you should, because NAHB describes cost plus as time and labor plus a percentage markup on materials without publishing a standard percentage. On a fixed bid the margin is inside one number, and the more useful question is which lines are allowances and which are specifications.

Written for homeowners by Most Recommended Custom Home Builders, which measures which custom home builders AI assistants actually recommend in 12 U.S. metros. Nobody can pay to be on those lists. How we measure.