The correct answer is: C. A house next door to our school is being built by them.
The other options are incorrect because they do not correctly order the words in the sentence. In the sentence “They are building a house next door to our school,” the subject is “they,” the verb is “are building,” the direct object is “a house,” and the prepositional phrase is “next door to our school.” The correct order of the words in the sentence is:
Subject + verb + direct object + prepositional phrase
They + are building + a house + next door to our school
The other options do not follow this order. For example, in option A, the direct object (“a house”) comes before the verb (“is being built”). In option B, the prepositional phrase (“next door to our school”) comes before the subject (“they”). And in option D, the verb (“is being built”) comes before the subject (“they”).
Therefore, the correct answer is: C. A house next door to our school is being built by them.