New Report Reveals 51.4% of U.S. Residential Builders Are Operating Unprofitably

HOUSTON, Feb. 18, 2026 /PRNewswire/ -- More than half of U.S. residential building companies are operating unprofitably once accounting accuracy is applied, according to the 2026 State of Residential Construction Industry (SORCI) Report released by the Association of Professional Builders (APB). While only 17.1% of U.S. builders reported making a loss, deeper financial analysis found that 51.4% were effectively unprofitable.

Now in its sixth year, the SORCI Report analyses financial and operational data from residential builders across the United States as part of a broader dataset of 8,462 participants collected since 2020. Data for this edition was collected in late 2025.

Key findings from the 2026 SORCI Report:

• 51.4% of U.S. residential builders were operating unprofitably once accounting accuracy was applied, compared with 17.1% who self-reported operating at a loss.
• Only 12% of builders correctly understand all four critical financial metrics: Work In Progress (WIP) adjustments, markup versus margin, fixed expense ratios, and net profit margins.
• 79.2% of builders who stated they knew how to calculate WIP adjustments were unable to correctly explain how WIP is calculated.
• The report identifies widespread accounting inaccuracies that result in profitability being overstated on financial statements.

The findings show a significant gap between reported profitability and financial reality within the U.S. residential construction sector. The report notes that without accurate financial reporting, builders may make decisions based on incomplete data.

"The data shows a clear difference between reported profitability and financial reality for many building companies," said Russ Stephens, Co-Founder of the Association of Professional Builders. "When core financial metrics are not fully understood or applied correctly, profitability can be overstated without builders realizing it."

The report highlights the Work In Progress Accounting Adjustment (WIPAA) as a key area of misunderstanding. While 60% of builders claimed they knew how to calculate WIP adjustments, testing revealed that nearly 80% of that group were unable to correctly explain the calculation. Inaccurate WIP reporting can cause building companies to appear profitable on paper while masking underlying financial exposure.

This research also identifies a distinct cohort of building companies that demonstrate strong financial visibility, disciplined systems, and accurate reporting practices. These businesses consistently perform at higher levels across key financial metrics and demonstrate greater financial stability over time compared to those operating without clear financial controls.

About the 2026 SORCI Report

The State of Residential Construction Industry (SORCI) Report is an annual benchmarking study produced by the Association of Professional Builders. The 2026 edition draws on six years of research into the residential construction industry, with 8,462 total participants since 2020 across the United States, Australia, Canada, and New Zealand.

About the Association of Professional Builders

The Association of Professional Builders works exclusively with owners and directors of residential building companies that focus on new homes and large remodeling projects. APB's mission is to improve the construction industry for both builders and consumers by helping building companies become systemized and profitable.

SOURCE Association of Professional Builders