SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                            FORM 10-K
                                
                                
        [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934
          For the Fiscal Year Ended: September 30, 1996
                                
                 Commission File Number 0-21900
                                
                      SUNDANCE HOMES, INC.
     (Exact name of registrant as specified in its charter)
                                

           Illinois                                 36-3111764
     (State or other jurisdiction          (IRS Employer Identification No.)
  of incorporation or organization)


     1375 E. Woodfield Road, Suite 600, Schaumburg, Illinois  60173
      (Address of principal executive offices, including zip code)
                                
 Registrant's telephone number, including area code:  (847) 255-5555
                                
Securities registered pursuant to Section 12(b) of the Act:  None
                                
   Securities registered pursuant to Section 12(g) of the Act:

                  Common Stock, $0.01 par value
                        (Title of Class)


Indicate  by check mark whether the registrant (1) has filed  all
reports  required  to be filed by Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934 during the preceding  12  months
(or  for such shorter period that the registrant was required  to
file  such  reports),  and (2) has been subject  to  such  filing
requirements for the past 90 days.  Yes    X       No

Indicate  by  check  mark  if  disclosure  of  delinquent  filers
pursuant  to Item 405 of Regulation S-K (229.405 of this chapter)
is  not contained herein, and will not be contained, to the  best
of  registrant's  knowledge, in definitive proxy  or  information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K. [X]

On  December 19, 1996, the aggregate market value of  the  voting
stock  held  by non-affiliates of the registrant,  based  on  the
closing sale price of the registrant's Common Stock as quoted  on
the  Nasdaq  Stock  Market's National Market,  was  approximately
$3,612,000.   (For  purposes  of  calculating  this  amount  only
directors,  executive officers, and beneficial owners  of  5%  or
more  of  the  Common Stock of the registrant  have  been  deemed
affiliates).

Number of shares of the registrant's outstanding Common Stock  at
December  19, 1996:  7,807,000

               DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement for its Annual
Meeting of Shareholders, scheduled to be held on March 4, 1997,
are incorporated by reference into Part III of this Report.

<PAGE>
                      SUNDANCE HOMES, INC.
                                
                            FORM 10-K
                                
                        TABLE OF CONTENTS
                                
                                                                        Page
PART I

     Item  1.   Business                                               1

     Item  2.   Properties                                            10

     Item  3.   Legal  Proceedings                                    10

     Item  4.   Submission of Matters to a Vote of Security  Holders  10

PART II

    Item  5.    Market for Registrant's Common Equity and Related
                Stockholder Matters                                   11

    Item  6.    Selected Consolidated Financial Data                  12

    Item  7.    Management's Discussion and Analysis of Financial
                Condition and Results of Operations                   13

    Item  8.    Financial  Statements  and  Supplementary  Data       17

    Item  9.    Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure                   17

PART III

    Item 10.    Directors and Executive Officers of the Registrant    18

    Item 11.    Executive  Compensation                               18

    Item 12.    Security Ownership of Certain Beneficial Owners
                and Management                                        18

    Item 13.    Certain Relationships and Related Transactions        18

PART IV

    Item 14.    Exhibits, Financial Statement Schedules, and Reports
                on Form 8-K                                           19

SIGNATURES                                                            20

<PAGE>
                             PART I
Item 1.  Business

The Company

Sundance  Homes, Inc. (the "Company") is a builder of  affordably
priced,  single-family detached and attached homes in the Chicago
metropolitan  area.  In September 1996, the Company  entered  the
urban  real  estate market with the introduction of  condominium-
loft  conversion and town-home projects.  The Company strives  to
deliver  superior  value to entry-level and  first  time  move-up
buyers  by  pricing  its homes competitively  while  consistently
providing  innovative  designs and  high-quality  products.   The
Company  typically offers one or more diverse  product  lines  of
single-family, detached and attached homes within  each  project,
with a variety of front elevations and architectural designs that
complement each other and create a sense of community within  the
project.

The Chicago metropolitan area, which includes Cook County and the
five  surrounding counties (McHenry, Lake, DuPage, Kane and  Will
Counties, commonly referred to as the "collar counties"), is  the
third largest metropolitan area in the United States.  Management
believes  that housing demand in these areas is strong  in  large
part  due  to  their proximity to concentrated job markets  which
have  developed along major highways to the north, northwest  and
west of Chicago.

The Company currently has seventeen communities in various stages
of  planning  and development and an additional seven  properties
under contract or option.  At September 30, 1996, the Company had
197  homes  subject  to  pending sales  contracts.   The  Company
currently   owns   sufficient  land  for   the   development   of
approximately   1,700 homes and is evaluating or negotiating  the
purchase of additional land, most of which is unentitled, for the
development of approximately 3,000 homes.

The Company is currently operating  three divisions:  the Chicago
Suburban  Division;  the Custom Home Division;  and  the  Chicago
Urban  Division.   The  Chicago  Suburban  Division  focuses   on
affordably  priced  entry-level and  first  time  move-up  houses
primarily in the collar counties surrounding Chicago. The  Custom
Home  Division  focuses  on  the semi-custom  and  custom  market
primarily  in the north and northwest Chicago suburban  counties.
The  Chicago  Urban Division focuses primarily on loft-conversion
and  townhome units in the City of Chicago.  The Company believes
that  the  division  structure allows each  operating  entity  to
provide   a   focused  insight  into  the  markets,  competition,
subcontractor pricing, and consumer tastes in which it  operates.
Each  division  operating  team is responsible  for  the  product
development, sales and marketing, home construction and  customer
service  aspects of their projects.  Corporate office support  is
provided  for  land acquisition and development, broad  marketing
and  promotional strategic decisions, accounting and finance, and
information systems.

Business Strategy

The  Company's  home building strategy consists of the  following
key elements:

Value  Pricing and Commitment to Quality. The Company strives  to
deliver  superior value to its home buyers by pricing  its  homes
competitively while consistently providing innovative designs and
high-quality  products.  The  Company's  commitment  to   quality
construction  is  a  cornerstone of its business  strategy.   The
Company  acts as general contractor for each of its projects  and
requires  that its subcontractors and suppliers use high quality,
durable  materials in the construction of its homes.  The project
manager  for each project is responsible for ensuring  that  each
home in the project meets the Company's standards for workmanship
and materials.
<PAGE>
Growth-Oriented  Markets.  The Company focuses its  home-building
in certain communities in the suburbs of Chicago where management
believes that land acquisition costs have remained relatively low
and  demand  for  entry  level and first time  move-up  homes  is
strong. The Company's current and planned projects are located in
southeastern  McHenry, northern Lake, western  DuPage,  Kane  and
Cook  Counties.  In  September 1996, the  Company  expanded  this
market  focus  to include the Chicago urban market,  particularly
the  downtown  Chicago  area  and the neighborhoods  adjacent  to
downtown.  Demographic shifts in the housing market combined with
the  diverse  and  stable economic environment  in  Chicago  have
translated  into population increases in and around the  downtown
area.   New homes built in Chicago during the first half of  1996
were 1,094, an increase of 67.5% over the first half of 1995. The
Company  will  continue to evaluate extending  its  home-building
activities  to other areas as opportunities consistent  with  the
Company's strategy arise.

Innovative   Design   and  Effective  Marketing.    The   Company
continuously monitors the home design and feature preferences  of
home  buyers in its markets and uses this market research in  its
effort  to  provide  innovative,  space-efficient  and  desirable
architectural designs and home amenities.  In each  project,  the
Company   creates  and  maintains  a  series   of   model   homes
representing  the home plans offered.  The Company believes  that
the  effective use of a variety of model homes plays an  integral
role  in marketing the competitive advantages of its home  design
to prospective buyers.

Property  Acquisition and Development.  The  Company  strives  to
minimize its overall property costs and the risks associated with
the  development  of  unentitled property by, whenever  possible,
using  options  and other financing arrangements that  allow  the
Company to control property through the entitlement process,  but
defer the payment for such property until the entitlement process
has  been  completed  and  the Company is  prepared  to  commence
construction.    The  Company  has  substantial   experience   in
obtaining  the  entitlements  necessary  to  develop  residential
properties.   In addition, the Company will occasionally purchase
entitled property to the extent that the price and terms of  such
purchase are believed by the Company to be advantageous.

Cost  Control.   The Company controls the cost of developing  its
projects  by: (i) seeking to purchase property at a low cost  per
unit;  (ii)  using its position as a leading homebuilder  in  its
markets to obtain favorable pricing on construction materials and
labor   from  its  subcontractors;  (iii)  adhering   to   strict
construction  schedules  and  closely  monitoring  the   physical
progress and costs of construction with the use of a computerized
tracking  system;  and (iv) striving to achieve  rapid  inventory
turnover  by pricing its homes at competitive levels and entering
into  sales  contracts  for a majority  of  its  homes  prior  to
commencement of construction.
<PAGE>
Summary of Residential Projects
<TABLE>
Since  1983, the Company has closed sales of approximately  4,900
homes  and  has completed 22 projects in the Chicago metropolitan
area.   The  following  presents  information  relating  to   the
Company's completed projects as of September 30, 1996.
<CAPTION>
                                            Year     Total Number    Average
 Project                          County  Completed    of Homes    Sales Price
<S>                               <C>     <C>        <C>           <C>
The Orchards (Lake Zurich)         Lake     1984          72         $116,000
Woodridge Center                  DuPage    1984          18           81,000
Newport Trail                     DuPage    1985          22          116,000
The Orchards (Carol Stream)       DuPage    1985          48           81,000
Woodale of Bartlett               DuPage    1985          76          116,000
Spring Valley                     DuPage    1986          88          126,000
University Heights                DuPage    1986         196          122,000
Amber Lakes                       DuPage    1987         283           86,000
Pine Ridge South                  DuPage    1987         135           96,000
Timber Lakes Estates               Lake     1987          66          181,000
Chestnut Place                     Cook     1989          20          130,000
Pine Ridge                        DuPage    1989         220          120,000
Woodglen Village                  DuPage    1989          63          132,000
Sussex Square                      Cook     1990         159          109,000
Hampton Woods                     McHenry   1991          78          180,000
Arbor Ridge                       DuPage    1992          79          247,000
Heritage At Stratford             DuPage    1992          99          237,000
Parkside on the Green              Cook     1992         308          167,000
Victoria Woods                    McHenry   1993         116          231,000
River's Edge                       Kane     1995          22          205,000
Lake in the Woods                 DuPage    1995          34          247,000
Spring Lake Farm                  McHenry   1995         432          148,000
Various model homes and odd lots    --         --        119          254,000
</TABLE>
<PAGE>

<TABLE>
The  following  presents information relating  to  the  Company's
current and planned projects as of September 30, 1996.
<CAPTION>
                                                             Estimated                           Homes
                                                              Homes at                             in
                                                             Completion    Homes     Homes      Backlog     Sales
Project                     Location        Initial Closing     (1)       Closed   Remaining      (2)    Price Ranges (3)
<S>                      <C>                 <C>             <C>          <C>      <C>          <C>      <C>             
Country Walk             Round Lake Beach,   3rd Qtr. 1992      780        724        56         10      $114,000-160,000
                         Lake County

Ravinia Woods            Gurnee,             4th Qtr. 1993      373        335        38         26      $150,000-199,000
                         Lake County

Spring Lake Farm South   Lake in the Hills,  1st Qtr. 1994      279        265        14          5      $111,990-205,990
 (4)                     McHenry County

Wildflower               Naperville,         3rd Qtr. 1994      251        235        16          7      $191,990-207,990
                         DuPage County
 
Heartland Meadows(5)     Elgin/South Elgin,  4th Qtr. 1994      662        375       287         66       $94,990-168,990
                         Kane County

Bellchase                Lake in the Hills,  2nd Qtr. 1995      666        133       533         45      $117,990-182,990
                         McHenry County

Conservancy              Gurnee,             2nd Qtr. 1995      131         56        75          8      $226,990-254,990
                         Lake County

Deloraine                Palatine,           3rd Qtr 1996        23          7        16          9      $310,000-342,000
                         Cook County

Sutton on the Lake       Round Lake Beach,   4th Qtr. 1996      481         16       465         15      $113,990-160,000
                         Lake County

Cherry Hill              Schaumburg,                             29          0        29          0      $185,000-277,000
                         Cook County   

St. Paul Lofts           Chicago,                                82          0        82          6       $84,900-264,600
                         Cook County

Erie Center Lofts        Chicago,                               106          0       106          0       $92,900-399,900
                         Cook County

Georgian Court (6)       Addison,                                47          0        47          0      $130,500-210,000
                         Cook County

Michigan Ave. Lofts(6)   Chicago,                                60          0        60          0      $140,535-198-650
                         Cook County

McCarty's Mill (6)       Aurora,                                115          0       115          0      $118,000-139,000
                         Kane County

Town Square (6)          Oswego,                                 75          0        75          0      $136,990-163,990
                         Kane County  

Gregg's Landing (6)      Vernon Hills,                          135          0       135          0      $359,000-431,000
                         Lake County

Properties Under         Various                              2,600          0     2,600          0
Contract (7)
                         Total                                6,895      2,146     4,749        197

<FN>
(1)          The estimated number of homes to be built at completion
       is subject to change and there can be no assurance that the Company
       will build these homes.
(2)          Homes in backlog refer to homes subject to pending sales
       contracts that, as of September 30, 1996,  had not closed and there
       can be no assurance that closings of such homes will occur.
(3)          Reflects base price, excluding any lot premiums and buyer-
       selected options, which vary from project to project.
(4)          This property includes 80 acres (279 units)  owned by The
       Sundance-Kaco Limited Partnership.  The Company is the general
       partner of the Sundance-Kaco Limited Partnership, with a 75%
       interest in such partnership.   The Sundance-Kaco Limited
       Partnership also holds an option for the purchase of an additional
       200 acres (approximately 400 lots).
(5)          The Company sold a portion of this property in the fourth
       quarter of 1996.  The purchaser holds an option, expiring September
       30, 1997,  to purchase an additional 109 lots.
(6)          The Company has preliminarily agreed to final terms on
       these locations and intends to acquire the property in fiscal 1997.
       The Company opened, or is scheduled to open, for sale in these
       communities in the first and second quarters of  fiscal 1997.
(7)          The Company is negotiating the purchase of land for these
       projects and does not currently have an estimate as to when an
       initial closing will occur.
</FN>
</TABLE>
<PAGE>
       Property Acquisition and Development

The  Company  selects  property for acquisition  and  development
based  upon  a  variety of factors, including: (i) financial  and
legal  review  as  to  the feasibility of the  proposed  project,
including projected profitability; (ii) demographic and marketing
studies;  (iii)  competition within  the  area  of  the  proposed
project;  (iv) proximity to concentrated job markets, quality  of
school  districts and local traffic corridors; (v) infrastructure
requirements  for grading, drainage, utilities and  streets;  and
(vi) management's judgment as to the real estate market, economic
trends  and the Company's experience in a particular area.    The
development  approach  for  the Company's  suburban  developments
varies  from its urban projects due to the nature of the acquired
property.

Suburban Development.  The Company seeks to minimize its  overall
land  costs  and the risks associated with developing  unentitled
land  by,  whenever possible, using options and  other  financing
arrangements that allow the Company to control land  through  the
entitlement process but defer the payment for such land until the
entitlement  process  has  been  completed  and  the  Company  is
prepared  to  commence construction.  The Company  has  generally
found long-time landowners to be more willing than speculators or
developers to defer payment and closing, thereby providing low or
no-cost financing to the Company through the entitlement process.
The  Company  strives to negotiate land purchase  contracts  that
allow  the Company to purchase portions of a parcel as  close  as
possible to the commencement of construction.

After  control of a parcel of unentitled land has been  obtained,
the  Company  prepares  preliminary  and  final  plans  for  each
project,  providing  for  infrastructure, neighborhoods,  wetland
preservation, educational and other public facilities, as well as
open  space.   Once  preliminary plans have  been  prepared,  the
Company  must  obtain numerous governmental approvals,  licenses,
permits  and  agreements, commonly referred to as "entitlements,"
before  it  can  commence development and  construction.   For  a
description   of   the  entitlement  process,  see   "-Government
Regulation   and   Environmental  Controls."   In   the   Chicago
metropolitan area, obtaining the many necessary entitlements  for
large  residential  developments is  an  extended  process  which
generally  takes  one to two years and can involve  a  number  of
different    governmental   jurisdictions   and   agencies    and
considerable  expense.  No assurance can be given, however,  that
the Company will be able to obtain entitlements within originally
projected   time   frames.   Unless  and  until   the   requisite
entitlements are received, a homebuilder generally does not  have
any rights to develop a project.

The  Company  has  occasionally  used  partnerships,  where  such
arrangements  were  advantageous, to acquire the  land  from  the
seller  or  where  such  arrangements appeared  to  be  otherwise
economically  advantageous  to the  Company.   The  Company  will
continue   to   consider   partnerships   and   other   financing
arrangements with landowners or other third parties.

In addition, the Company may purchase entitled land to the extent
that  the  price and terms of such purchase are believed  by  the
Company  to  permit  development within acceptable  profitability
levels.   Through  the purchase of entitled  or  fully  developed
lots,  the  Company can reduce the amount of financial or  market
risks inherent in the development process.

Sales  of  land  and lots have not previously had  a  significant
impact  on the Company's financial results.  However, the Company
will  maintain  the flexibility to sell land  and  lots  to  take
advantage of market opportunities that may exist.

Urban Development.  The Company typically targets for acquisition
a  former or current manufacturing building which is suitable for
the  conversion to residential loft-condominiums or  construction
of  townhomes.   Each of the factors outlined in the  acquisition
process  above  is performed on these sites, including  assessing
the  Company's  ability  to obtain appropriate  entitlements  and
zoning.    Other factors evaluated are the Company's  ability  to
provide   adequate   parking  capacity  and  access   to   public
transportation, commercial centers, and various City  of  Chicago
amenities.

Prior   to   acquisition,  the  Company  prepares   architectural
drawings, performs environmental testing and assessments, reviews
zoning  and  entitlement requirements, and  prepares  feasibility
studies  based on projected absorption and estimated construction
costs.   The  Company has been able to start initial construction
activities  soon  after acquisition and will typically  open  for
sale  within  six months after acquisition as the evaluation  and
zoning period is much less than for suburban developments.
<PAGE>
Home and Community Design

The  Company continuously engages in market research in an effort
to  ensure  that  its  home  designs  and  features  address  the
preferences  of  potential  home  buyers.   The  Company  closely
monitors  the designs and features chosen by buyers of its  homes
as  well  as  those offered by competitors in  its  markets.   In
addition,  the Company conducts focus groups, exit interviews  at
its  model home sites, telephone surveys and demographic  studies
in  an effort to produce the most desirable architectural designs
and  home  amenities available in a particular price range.   The
Company's  marketing  and  design  staff  develop  the   detailed
standards and specifications for each new product line  and  then
work  closely  with  one  of  a  select  number  of  unaffiliated
architectural firms to produce a product line that  delivers  the
home designs and features preferred by the target home buyers.

Within each suburban project, the Company seeks to create a sense
of  community through the use of cul-de-sacs, landscaping  and  a
variety  of  front  elevations  and  architectural  designs  that
complement  each  other.   The  Company  also  seeks  to   create
continuity  within  each  project by  coordinating  the  exterior
colors  and trim of neighboring homes.  The product lines offered
in  a  particular project depend upon many factors including  the
housing  alternatives generally available in the area, the  needs
of the target home buyers for such project and the Company's cost
per lot in the project.

Construction

The  Company  acts as the general contractor for the  development
and  construction of its projects, employing project managers who
supervise  the  land  development and  construction  within  each
project.    Typically,  the  Company  relies   on   two   project
superintendents to supervise construction for each  product  line
within a project.  The "rough" superintendent is responsible  for
each home within a product line from excavation until the drywall
is  in place.  The "trim" superintendent is then responsible  for
each home within the product line until the home is delivered  to
the  buyer.   Generally, each project superintendent  coordinates
the  activities  of  the subcontractors, suppliers  and  building
inspectors and is responsible for ensuring that the homes conform
to the Company's quality control standards.

The Company also acts as general contractor for its urban project
developments.  The Company employs a project construction manager
who typically supervises one or more building conversions, and  a
construction   superintendent  who  supervises  all   phases   of
construction for a particular building.   The length of  time  of
construction  process is expected to vary due to  the  amount  of
demolition,  environmental,  or other construction  requirements.
Additionally, occupancy requirements typically specify completion
of  an  entire phase prior to the initial closings, and  as  such
will  usually  result  in an approximate  nine  to  twelve  month
construction cycle.

Subcontractors  typically are retained  on  a  project-by-project
basis  to complete construction at a fixed price per model for  a
varying  term,  usually six months to one year.  Agreements  with
the  Company's  subcontractors are generally entered  into  after
competitive bidding among competing subcontractors.  The  Company
maintains  close  contact with many of its  subcontractors.   The
Company  negotiates price and volume discounts with manufacturers
and  suppliers on behalf of subcontractors to take  advantage  of
its volume of production.  Management believes that this strategy
has given the Company an advantage in producing quality homes  at
the  lowest  possible cost.  The Company typically obtains  price
guarantees from manufacturers and material suppliers,  but  makes
no long-term purchase commitments to material suppliers on behalf
of subcontractors.

Materials  used  in the construction of the Company's  homes  are
available  from  a  number of sources, but  material  prices  may
fluctuate  due  to various factors, including supply  and  demand
imbalances.  In light of such fluctuation, the Company  continues
to  evaluate  various alternative sources of  materials  such  as
using  metal  frames and engineered lumber (i.e., soft  woods  in
laminated  form)  instead  of  construction  lumber  for  certain
purposes.  Construction labor has generally been available to the
Company,   but  the  homebuilding  industry  has  in   the   past
experienced  occasional  shortages of skilled  labor  in  certain
markets.  Although there is presently an adequate supply of labor
and  materials  for the Company's projects, it is  possible  that
future shortages of skilled workers and/or materials may occur.
<PAGE>
For  suburban  developments, the Company generally  clusters  the
homes  sold  within a project, which management believes  creates
efficiencies  in land development and construction  and  improves
customer  satisfaction  by reducing the  number  of  vacant  lots
surrounding  a  completed home.  The Company typically  completes
the  construction of a home within four months from  commencement
of  construction, although the construction schedule for  a  home
depends in large part on the time of year, availability of labor,
materials and supplies and other factors.

The Company has historically provided a one year limited warranty
of  workmanship and materials and a two year limited warranty  on
the  working systems for each of its  homes.  Beginning in  1995,
the  Company expanded its warranty policy to include a  ten  year
limited    warranty    against   certain   structural    defects.
Historically,  the  Company  has  not  incurred  any  significant
financial  costs relating to any warranty claims  or  defects  in
construction (see Item 3. Legal Proceedings).

Marketing and Sales

The  Company attracts initial interest in its projects through  a
comprehensive advertising program using media such as newspapers,
direct  mail  to  potential  home buyers,  and   billboards.   In
addition,  the  Company  has a buyer referral  program  in  which
buyers   of  the  Company's  homes  receive  referral  fees   for
introducing new buyers to the Company.  The Company believes that
it  has  a  reputation for developing high quality homes  in  the
Chicago  metropolitan area which helps generate interest in  each
new project.

The  Company believes that the effective use of model homes plays
an  integral role in demonstrating the competitive advantages  of
its  home  designs and features to prospective home buyers.   The
Company  employs in-house interior designers who are  responsible
for  creating and maintaining an attractive model home  for  each
product line.

The  Company's objective is to enter into sales contracts for all
of its homes in advance of construction, thereby greatly reducing
the  risk of unsold inventory.  The sales contracts for its homes
generally  provide  for  mortgage  approval  within  a  specified
period.   The  Company  attempts  to  minimize  cancellations  by
requiring a nonrefundable cash deposit of approximately 5% to 10%
of the purchase price for buyers using conventional financing and
by  training  its  sales  force to assess  the  qualification  of
potential  home  buyers.  A network database available  to  sales
personnel provides information as to the qualifying criteria  for
certain  lenders,  thus  allowing sales  personnel  to  assess  a
customer's  ability to qualify for a mortgage  at  the  time  the
customer is selecting a model and options.

A  majority  of  the  Company's  homes  are  sold  by  full-time,
commissioned  employees  who typically work  from  sales  offices
(open   seven   days  a  week)  located  within  each    project.
Additionally,   the  Company  sells  homes  through   independent
brokers.  Employees assist prospective buyers throughout the home
buying  process by providing them with information from a network
database  (developed  by the Company) on  the  available  product
lines,   pricing,   options  and  upgrades,  mortgage   financing
(including  qualifying  criteria), warranties  and  construction.
This  database also contains a complete listing of the  Company's
home  buyers and can produce detailed demographic information  on
the  residents of a project.  The concentration of the  Company's
developments  within  the  Chicago  metropolitan  area  makes  it
possible  for the Company to retain sales employees for  a  long-
term, rather than on a project-by-project basis, which management
believes   results  in  reduced  training  costs   and   a   more
knowledgeable and motivated sales force.

The   Company  has  experienced,  and  expects  to  continue   to
experience,  significant  seasonality  and  quarter  to   quarter
variability in residential sales and net income.  Generally,  the
receipt of sales contracts is highest during the first six months
of  the  calendar year.  Related closings peak in  the  September
through  November period as homes contracted for sale earlier  in
the   year   are  delivered.   Management  believes   that   this
seasonality reflects the tendency of home buyers to  shop  for  a
new  home in the Spring with the goal of closing in the  Fall  or
Winter  as  well as the scheduling of construction to accommodate
seasonal  weather conditions (see Note 12. Quarterly  Results  of
Operations   in   the   Footnotes   to   Consolidated   Financial
Statements).
<PAGE>
Backlog

The Company's homes are generally offered for sale in advance  of
their   construction.   Substantially  all   of   the   Company's
residential  sales  during 1996 were sold  pursuant  to  standard
sales   contracts   entered  into  prior   to   commencement   of
construction.   The Company's standard sales contracts  generally
require  the  customer  to  make an earnest  money  deposit  upon
signing.  This deposit may range from a nominal amount for an FHA
or VA financed purchase, to 5% to 10% of the purchase price for a
buyer  using  conventional  financing.   Upon  execution  of  the
contract and receipt of the deposit, the home sale is included in
backlog.  The Company recognizes revenue on residential sales  at
closing, when title to the home has passed to the buyer.

<TABLE>
The  following table provides certain backlog information for the
periods presented: (in thousands of dollars):
<CAPTION>
                                                   September 30,             December 31,
                                             1996      1995      1994        1994    1993
   <S>                                    <C>       <C>       <C>        <C>       <C>    
   Number of home sales closed during         701       631       609        687      478
   the twelve month period 

   Lots/units owned and available for       1,717     3,113     3,561      3,317     4,251
   development
   
   Number of lots/units under contract      3,032       824     1,778      1,778       980
 
   Backlog                                    197       274       579        355       365

   Average sales price in backlog            $168      $183      $157       $153      $165
   
   Aggregate sales value in backlog       $33,193   $50,232   $90,800    $54,167   $60,350
</TABLE>

The  Company's  backlog  at any particular  date  is  subject  to
substantial  variation  and is dependent  upon  several  factors,
including  the number of homes then available for  sale  and  the
length  of  time necessary to complete the closing of home  sales
subject  to pending contracts.  The Company anticipates that  the
closing of any sales of homes in backlog as of September 30, 1996
will  occur in fiscal 1997.  However, no assurances can be  given
that  homes  in  backlog will result in  actual  closings.    The
aggregate  sales  value  of backlog decreased  approximately  $17
million  from  September  30,  1995  to  September  30,  1996  as
efficiencies in the Company's construction process resulted in an
ability  to close more homes in a shorter time period  in  fiscal
1996.     The   aggregate  sales  value  of   backlog   decreased
approximately $40.6 million from September 30, 1994 to  September
30,  1995 as a result of the reduced number of orders in the 1995
period  (306 orders) as compared to the 1994 period (704  orders)
combined with the impact of projected closings in 1994 that  were
delayed  to  future periods as a result of the regulatory  delays
experienced  in certain projects.  The aggregate sales  value  of
backlog decreased 10%, or $6.2 million, from December 31, 1993 to
December  31,  1994 primarily as a result of the reduced  average
selling price of homes sold.

Customer Financing

Substantially   all   home  buyers  utilize  long-term   mortgage
financing to purchase a home.  Lenders generally make loans  only
to borrowers who earn three to four times the total amount of the
mortgage payment plus insurance and property taxes.  As a result,
economic  conditions, increases in unemployment or high  mortgage
interest  rates can eliminate a substantial number  of  potential
home  buyers  from the market.  Although mortgage  financing  for
qualified home buyers was readily available during the year ended
September  30,  1996, there can be no assurance  that  affordable
mortgage   financing  will  remain  available  to  the  Company's
customers in the future.
<PAGE>
FHA  and  VA  financing generally enable home buyers to  purchase
homes  with  lower down payments than the down payments  required
through  conventional financing, allowing a purchaser  to  borrow
from  90%  to 95% of the value of the home.  The Company believes
that when conventional lending rates are higher, the availability
of   FHA  and  VA  financing  broadens  the  group  of  potential
purchasers  for  the  Company's  homes.   If  conventional  rates
increase  substantially, the Company expects this  percentage  of
buyers  applying  for  FHA or VA approval  to  increase.   As  of
September  30,  1996,  the FHA financing limit  for  a  one  unit
residence was $152,362.

Competition and Market Factors

The  homebuilding industry is a highly competitive and fragmented
market.    The  Company  competes  for  residential  sales   with
national,   regional  and  local  developers  and   homebuilders,
individual  resales  of  existing  homes  and  condominiums,  and
available  rental  housing.  The Company also  competes  for  the
acquisition  of undeveloped land on which to build homes.   Sales
of  homes  and  land at deeply discounted prices by  competitors,
lenders and similar institutions in the markets where the Company
operates  could  have a material adverse effect on  the  Company.
The  Company is one of the leading developers of affordable homes
in  the  Chicago  metropolitan area,  and  believes  it  competes
favorably  as  a result of price, its development expertise,  its
knowledge  of  the  local  real estate  market  and  governmental
permitting and approval process, and its favorable reputation  in
the Chicago metropolitan area homebuilding industry.

The  homebuilding industry is cyclical and affected  by  consumer
confidence  levels and prevailing economic conditions in  general
and  by  job availability and interest rate levels in particular.
A  variety of other factors affect the homebuilding industry  and
demand for new homes, including changes in costs associated  with
home  ownership  such as increases in property taxes  and  energy
costs,  changes in consumer preferences, demographic  trends  and
the availability of and changes in mortgage financing programs.

Government Regulation and Environmental Controls

Generally, the Company must obtain numerous government approvals,
licenses,  permits and agreements, referred to as "entitlements,"
before  it  can  commence development and construction.   Through
options  and other financing arrangements, the Company  typically
controls unentitled land during the entitlement process and  only
purchases  the  land  after the planning and  zoning  process  is
complete.  However, obtaining the many necessary entitlements for
residential developments in the Chicago metropolitan area  is  an
extended process which generally takes one to two years  and  can
involve  a  number  of different governmental  jurisdictions  and
agencies  and  considerable expense.  No assurance can  be  given
that the Company will be able to obtain entitlements in such time
frame  in  the future.  The Company generally does not  have  any
rights  to  develop  a project until after it  has  received  all
required entitlements.  Several governmental authorities  in  the
Chicago  metropolitan  area  have imposed  fees  as  a  means  of
defraying the cost of providing certain governmental services  to
developing areas, or have required developers to donate  land  to
the municipality or to make certain off-site land improvements.

Certain  permits and approvals will be required to  complete  the
residential developments currently being planned by the  Company.
The  ability  of  the Company to obtain necessary  approvals  and
permits  for these projects is often beyond the Company's control
and  could  restrict  or  prevent the  development  of  otherwise
desirable  property.   The  length of time  necessary  to  obtain
permits  and approvals increases the carrying costs of unimproved
property   acquired   for   the  purpose   of   development   and
construction.   In  addition,  the  continued  effectiveness   of
permits already granted is subject to factors such as changes  in
policies,  rules  and  regulations and their  interpretation  and
application.

The  Company is also subject to a variety of federal,  state  and
local  statutes,  ordinances, rules  and  regulations  concerning
protection of health and the environment.  These laws may  result
in  delays,  cause  the  Company to incur substantial  compliance
costs  and  prohibit or severely restrict development in  certain
environmentally sensitive regions or areas.  Prior to  purchasing
a  parcel  of  land,  the Company evaluates  such  land  for  the
presence  of  hazardous or toxic materials, wastes or substances.
To date, the Company has not experienced any material delays as a
result  of these laws and the Company's operations have not  been
materially affected by the presence or potential presence of such
materials.
<PAGE>
Bonds and Other Obligations

The  Company  is  frequently required,  in  connection  with  the
development of its projects, to obtain performance or maintenance
bonds  or letters of credit in lieu thereof.  The amount of  such
obligations outstanding at any time varies in accordance with the
Company's pending development activities.  In the event any  such
obligations  are  drawn upon, the Company would be  obligated  to
reimburse  the issuing surety company or bank.  At September  30,
1996,  there  were approximately $11.6 million in performance  or
maintenance  bonds and approximately $9.1 million in  letters  of
credit outstanding for such purposes (see Management's Discussion
and Analysis-Liquidity and Capital Resources).

Employees

As of September 30, 1996, the Company employed 138 persons, 58 of
whom  were  involved  in  project management,  land  development,
production,  contract management and contract administration,  33
of  whom were sales and marketing personnel, and 47 of whom  were
executive,  accounting,  systems  and  administrative  personnel.
Although   none  of  the  Company's  employees  are  covered   by
collective bargaining agreements, many of the subcontractors  and
suppliers  which  the  Company engages are represented  by  labor
unions or are subject to collective bargaining arrangements.  The
Company   believes  that  its  relations  with   its   employees,
subcontractors and suppliers are good.

Item 2.  Properties

The  Company currently occupies approximately 25,000 square  feet
of  office  space for its corporate headquarters  in  Schaumburg,
Illinois.   The lease for this office space began on  October  1,
1994 and expires on December 31, 1999.

Item 3.  Legal Proceedings

The  Company  is  involved in various routine  legal  proceedings
incidental to the conduct of its business.

In  November, 1994, a lawsuit was brought against the Company and
certain  directors and employees of the Company by the  Board  of
Managers  of Parkside on the Green Condominium Association.   The
complaint   seeks  damages  against  the  Company   for   alleged
construction  defects in the approximate amount of $1.6  million,
together with punitive damages against the named individuals  for
alleged  breach of fiduciary duty.  The Company has  assumed  the
defense  of  this lawsuit on behalf of the individual defendants.
The  lawsuit  is in the discovery process and various inspections
are underway. The Company is defending the lawsuit vigorously.

Management  believes  that none of these legal  proceedings  will
have  a  material  adverse impact on the financial  condition  or
results of operations of the Company.

Item 4.  Submission of Matters to a Vote of Security Holders
<PAGE>
There  were  no  matters submitted to a vote of security  holders
during the Company's fiscal quarter ended September 30, 1996.

                             PART II

Item 5.       Market  for Registrant's Common Equity and  Related
      Stockholder Matters

The  Company's Common Stock has been quoted on the  Nasdaq  Stock
Market's National Market (the "National Market") under the symbol
SUNH since July 9, 1993.

The following table shows the high and low closing prices for the
Common  Stock  for  the  periods indicated  as  reported  by  the
National Market:
<TABLE>
     <S>                                    <C>       <C>
     Fiscal 1996                            High      Low
     Quarter ended September 30, 1996       $4.000    $1.125
     Quarter ended June 30, 1996             2.250     1.375
     Quarter ended March 31, 1996            2.250     1.563
     Quarter ended December 31, 1995         2.875     1.563

     Fiscal 1995
     Quarter ended September 30, 1995        2.875     2.250
     Quarter ended June 30, 1995             3.625     2.000
     Quarter ended March 31, 1995            3.875     2.500

     Quarter ended December 31, 1994         4.000     1.875
</TABLE
The  closing  price of the Company's Common Stock as reported  on
the  National Market on December 19, 1996 was $3.0625 per  share.
As  of December 19, 1996, there were 40 holders of record of  the
Company's Common Stock.

Dividends

The  Company intends to retain its future earnings to finance the
continuing development of its business.  Accordingly, the Company
does not anticipate paying any cash dividends on its Common Stock
in  the  foreseeable future.  The payment of any future dividends
will be at the discretion of the Company's Board of Directors and
will  depend  upon,  among  other things,  future  earnings,  the
success   of   the  Company's  development  activities,   capital
requirements, restrictions in financing arrangements, the general
financial   condition  of  the  Company  and   general   business
conditions.   At present, the Company's ability to pay  dividends
is restricted to 50% of consolidated net income for the preceding
fiscal  year  provided  the Company is  not  in  default  of  any
provisions  of  the  Loan  Agreement (as defined  hereafter,  see
"Management's Discussion and Analysis of Financial Condition  and
Results of Operations-Liquidity and Capital Resources").
<PAGE>
Item 6.  Selected Consolidated Financial Data

The  following selected consolidated financial and operating data
of  the Company are qualified by reference to and should be  read
in  conjunction  with the Consolidated Financial  Statements  and
Notes thereto and other financial data included elsewhere herein.
The  data set forth below (except for the pro forma statement  of
income data) as of and for the year ended September 30, 1996, the
nine months ended September 30, 1995 and the years ended December
31,  1994,  1993, and 1992 have been derived from  the  Company's
audited  consolidated financial statements.  Consolidated balance
sheets at September 30, 1996, September 30, 1995 and December 31,
1994  and the related consolidated statements of income,  changes
in  shareholders'  equity,  and cash flows  for  the  year  ended
September 30, 1996, the nine months ended September 30, 1995  and
the  year  ended  December  31, 1994  and  notes  thereto  appear
elsewhere  herein.  These historical results are not  necessarily
indicative  of  the  results to be expected in  the  future  (see
"Management's Discussion and Analysis of Financial Condition  and
Results of Operations").

</TABLE>
<TABLE>
                                                                   Nine         Years ended
                                                  Year            Months
                                                  ended            ended
   Statement of Income Data:                   September 30,   September 30,  December 31,  December 31,  December 31,
                                                   1996            1995            1994          1993         1992
                          (in thousands, except per share amounts)
   <S>                                           <C>             <C>            <C>             <C>         <C>     
   Residential Sales (1)                         $120,948        $63,811        $118,659        $77,764     $86,208
   
   Income (loss) before minority interest and       2,176         (7,051)          3,643          8,035      10,382
   provision for income taxes (2)
   
   Net income (loss)                                1,235         (4,216)          1,930          5,090       8,073

   Net income (loss) per share                      $0.16          ($0.54          $0.25               
   
   Pro Forma Statement of Income Data: (3)

   Net income                                                                                    $4,709      $5,010

   Net income per share                                                                            0.76        1.00
</TABLE>
<TABLE>
   Balance Sheet Data:         September 30,   September 30,  December 31,    December 31,  December 31,
                                   1996            1995           1994            1993          1992
                                                   (in thousands)
   <S>                           <C>              <C>            <C>             <C>           <C>
   Real estate inventories       $76,101          $86,434        $86,721         $65,370       $25,559
   
   Total assets                   86,406           98,880         98,907          81,057        35,076
   
   Notes and mortgages payable    23,027           42,787         34,280          26,873        12,018
   
   Minority interest (2)             111              266          1,049             (64)        1,525
   
   Shareholders' equity           28,393           27,153         31,369          29,439        10,297
   
<FN>
(1)Residential sales are recognized at closing, when title to the home has passed to
  the  buyer  (see Note 1 of the Notes to Consolidated  Financial
  Statements).
(2)The Company is the General Partner of The Sundance-Kaco Limited Partnership, with
  a  75%   interest in said partnership.  Under the terms of  the
  partnership agreement, the limited partner is entitled  to  25%
  of  all  profits  of  the  partnership and  will  receive  cash
  distributions.   Through  1993, the  Company  was  the  general
  partner  of  The  Victoria Woods Limited  Partnership,  with  a
  50.1%  interest in such partnership.  Under the  terms  of  the
  partnership  agreement,  the limited partner  was  entitled  to
  49.9%  of  all  profits of the partnership  and  received  cash
  distributions.
(3)The pro forma statement of income data are based on historical net income, as adju
sted  to  reflect  a  provision  for  income  taxes,  as  if  the
Company had been a C Corporation since inception  (see Note 2  of
the Notes to Consolidated Financial Statements).
</FN>
</TABLE>
<PAGE>
Item   7.Management's  Discussion  and  Analysis   of   Financial
       Condition and Results of Operations

General

In 1995, the Company changed its fiscal year end from December 31
to  September 30.  The Company's discussion regarding the Results
of  Operations compares the year ended September 30, 1996 to  the
unaudited   year  ended  September  30,  1995;  the  nine   month
transition period ended September 30, 1995 to the unaudited  nine
month  period  ended  September 30,  1994;  and  the  year  ended
December 31, 1994 to the year ended December 31, 1993.

Results of Operations
<TABLE>
The  following  tables set forth the percentage of the  Company's
residential  sales  represented by  each  income  statement  line
presented  and certain other information regarding the  Company's
operations for the periods indicated.
<CAPTION>
                                                Twelve                Nine months           Twelve
                                             months ended               ended                 months ended
                                        Sept. 30,   Sept. 30,   Sept. 30,   Sept. 30,    Dec. 31,    Dec. 31,
                                         1996         1995        1995        1994         1994        1993
  <S>                                   <C>          <C>         <C>         <C>          <C>         <C>      
  Residential sales                     100.0%       100.0%      100.0%      100.0%       100.0%      100.0%
  
  Cost of sales                          88.5         91.6        92.2        82.4         85.4        76.8
  
  Reduction in carrying value of real                                                   
  estate assets                            -           3.4         5.7          -           -           -

  Gross profit                           11.5          5.0         2.1        17.6         14.6        23.2
 
  Selling expenses                        5.8          6.3         7.7         6.8          5.9         6.3
 
  General and administrative expenses     4.1          4.7         5.3         6.3          5.5         6.5

  Other (income) expense, net            (0.2)         0.2         0.1           -          0.1         0.1

  Income (loss) before minority
  interest and provision for
  income taxes                            1.8         (6.2)       (11.0)       4.5          3.1        10.3  
  
  Minority interest                       0.1           -            -         0.6          0.4         0.2

  Provision (benefit) for income taxes    0.7         (2.5)        (4.4)       1.6          1.1         4.0*

  Net income (loss)                       1.0%        (3.7)%       (6.6)%      2.3%         1.6%        6.1%

                                                                
  New orders (net)                       624           326           306       659           828         607
  
  Homes closed-units                     701           631           387       443           687         478
 
  Average selling price-homes closed    $172,500      $169,800      $165,000   $170,000     $173,000    $161,000  
<FN>
Pro  forma income tax provision gives effect to estimated  income
taxes  that  would have been reported had the Company  been  a  C
Corporation  since inception (see Notes 2 and 6 of the  Notes  to
Consolidated Financial Statements).
</FN>
</TABLE>
<PAGE>
Year Ended September 30, 1996 Compared to the Twelve Months Ended
September 30, 1995

Residential  sales,  which are recognized upon  the  selling  and
closing  of homes, increased $13.8 million to $120.9 million  for
the  year ended September 30, 1996, an increase of 12.9% over the
twelve  months  ended  September  30,  1995.  The  increase   was
primarily due to an increase in the number of deliveries  in  the
year  from  631  in  the 1995 period to 701 in the  1996  period.
Additionally,  the  average  sales price  of  home  sales  closed
increased  from  $169,800 in fiscal 1995 to  $172,500  in  fiscal
1996.

There  were 624 net new sales orders for the year ended September
30, 1996 representing an increase of 91%, or 298 orders, from the
comparable  1995 period total of 326. The Company attributes  the
increase  to the offering of a simplified and economical  product
line  to  the  first-time home buyer at three developments  which
accounted  for approximately 50% of new orders and  30%  of  home
closings in fiscal 1996.

Cost of sales includes land acquisition costs, development costs,
construction   costs   and   direct   overhead,   job   oversight
supervision,  customer  service,  warranty  costs,  interest  and
property  taxes.   Cost of sales increased $8.9 million  to  $107
million  in fiscal 1996.  Cost of sales as a percent of  revenues
was  88.5% in fiscal 1996 compared to 91.6% of sales revenue  for
the  1995  period, excluding the reduction in carrying  value  of
real estate assets of $3.7 million (see discussion related to the
reduction  in  real estate assets in the comparative  nine  month
periods  below).  The increase in gross profit as  a  percent  of
sales  of 3.1 percentage points (exclusive of the 1995 adjustment
to real estate inventories) primarily resulted from reductions in
direct  construction costs as a percentage of sales  due  to  the
product   standardization  initiatives  begun  during  the   year
combined with reductions in field overhead expense.

   Selling   expenses  include  advertising,  sales  commissions,
payroll,  amortization of the costs of non-permanent upgrades  to
convert  standard homes to model homes (draperies, wall-hangings,
decor  items) and maintenance of model homes.  Certain  expenses,
such   as  sales  commissions  and  amortization  of  model  home
upgrades,  are  derived from sales prices or the number  of  home
sales  closed and thus remain relatively constant as a percentage
of  residential sales.  Other expenses, such as advertising costs
and  model  home maintenance, may be significantly influenced  in
any  given  period  by  the number of grand openings  or  special
promotions  and the number of projects operating in that  period.
Costs associated with upgrading standard homes to model homes are
capitalized and expensed as related home sales are closed,  while
most other selling expenses are expensed as incurred.

Selling  expenses increased by $0.2 million to  $7.0  million  in
fiscal  1996.  As a percent of sales, selling expenses  decreased
from  6.3% in the twelve months ended September 30, 1995, to 5.8%
in fiscal 1996. The decrease as a percent of sales revenue is due
primarily to the reduced number of model homes, which resulted in
reduced carrying costs.

General  and administrative expenses decreased nominally  in  the
year  ended  September 30, 1996 compared to the  comparable  1995
period.    As  a  percent of sales,  general  and  administrative
expense decreased  from 4.7% to 4.1%.

The  Company  is  the general partner, with a  75.0%  partnership
interest,  in the Sundance-Kaco Limited Partnership, an  Illinois
limited  partnership.  Also participating in the  partnership  is
one  limited partner, Kaco, Inc,  which is entitled to  25.0%  of
all profits from the Spring Lake Farm South project.  The limited
partner's  share of profits for 1996 was $117,000.   Pursuant  to
the  provisions  of  the partnership agreement,  limited  partner
contributions  of  $73,000  were received  and  distributions  of
$345,000 were paid during 1996.

 The provision for income taxes was $824,000 in fiscal 1996.  The
Company   recognized  an  income  tax  benefit  of  approximately
$2.7 million for the twelve months ended September 30, 1995.  The
effective  tax  rate for fiscal 1996 and 1995  was  approximately
40%.
<PAGE>
Nine  Months  Ended September 30, 1995 Compared  to  Nine  Months
Ended September 30, 1994

The  Company reported a loss from operations for the  nine  month
period  ended September 30, 1995 of $4.2 million (after an income
tax  benefit of $2.8 million).  A significant factor in the  loss
for  the period was a $3.7 million reserve (before income  taxes)
recorded  in  the  second  quarter to reflect  the  reduction  in
carrying value of certain real estate inventories and the  write-
off  of  other  capitalized  costs.  The  reduction  includes  an
adjustment  of  $2.9  million (before income  taxes)  related  to
management's  decision  not to continue  development  of  certain
property which the Company owned.  The Company had chosen not  to
develop  this property as it identified more relevant development
opportunities which were consistent with the Company's  long-term
market  strategy.  Also contributing to the loss for  the  period
was the write-off of capitalized costs related to certain product
lines which were discontinued.

  Residential sales decreased $11.6 million to $63.8 million  for
the nine month period ended September 30, 1995 as compared to the
comparable  period in 1994.  The decrease in sales  revenues  was
primarily due to a reduction in the number of closings  from  443
in  the first nine months of 1994 to 387 in the first nine months
of  1995.   Additionally, the average sales price of  home  sales
closed decreased from $170,000 in 1994 to $165,000 in 1995.   The
decrease in average selling price for the period was due  to  the
change  in  the  mix  of home types closed to include  a  greater
portion of lower-priced multi-family homes in the 1995 period.

There were 306 net new sales orders for the first nine months  of
1995,  which  was  down substantially from  the  comparable  1994
period  total of 704.  The 1995 net orders included delay related
cancellations  of  approximately  87  units.   The  Company   had
experienced regulatory delays in obtaining permits at Spring Lake
Farm  Phase  II  (Bellchase), Wildflower and  Heartland  Meadows,
which   resulted  in  the  above-mentioned  cancellations.    The
decrease   primarily  reflects  the  impact  of   the   increased
competition at each of the communities as well as the increase in
sales  prices in the first quarter which resulted in a  reduction
in sales orders.

Cost  of  sales decreased from $62.1 million in the  nine  months
ended  September  30,  1994 compared  to  $58.9  million  in  the
comparable 1995 period. Cost of sales in the first nine months of
1995  increased 9.8 percentage points over the comparable  period
in  1994.   Consequently, gross margins decreased from  17.6%  of
sales   to  7.8%  of  sales.   Contributing  to  the  significant
deterioration  in margins for the year were reduced  fixed  costs
absorption as a result of the decrease in unit closings, combined
with the carryover effect from 1994 of home sales delivered which
had  been  previously  subject  to significant  delays  from  the
anticipated  original closing date.  Additionally,  approximately
thirty model and spec homes were sold and closed in 1995.   These
homes   typically  close  at  reduced  margins  as  compared   to
production homes, due to the permanent upgrades included as  part
of  the  home.   The Company also incurred certain costs  due  to
product standardization and model consolidation initiatives.

  Selling  expenses decreased by $0.2 million to $4.9 million  in
the  nine  months ended September 30, 1995.  As a  percentage  of
sales,  selling expenses increased from 6.8% to 7.7% in the  nine
months ended September 30, 1995. This increase was primarily  due
to  the  reduction  in  unit closings in the  1995  period  which
reduced  the  ability  of  the Company to  absorb  fixed  selling
expenses..

General  and  administrative expenses decreased $1.4  million  to
$3.4 million in the nine months ended September 30, 1995 compared
to  the  1994  period.    As a percent  of  sales,   general  and
administrative  expense  decreased   from  6.3%  to  5.3%.    The
significant   decrease  was  achieved  primarily  through   staff
reductions and cost control initiatives.

The  limited  partner's  share of losses for  1995  was  $24,000,
resulting  in  a  minority interest benefit  for  the  period  as
compared  to  minority  interest  expense  of  $438,000  in   the
comparable  1994  period.   Pursuant to  the  provisions  of  the
partnership agreement, limited partner contributions of  $111,000
were  received  and distributions of $870,000  were  paid  during
1995.

The  Company  recognized an income tax benefit  of  approximately
$2.8 million for the nine months ended September 30, 1995 and  an
expense  provision  of  $1.2 million for the  1994  period.   The
effective   tax   rate  for  the  1995  and  1994   periods   was
approximately 40%.
<PAGE>
Year Ended December 31, 1994 Compared to Year Ended December  31,
1993 (Pro Forma)

Sales  revenue  increased $40.9 million to  $118.7  million  (687
homes)  or 52.6% for 1994 compared to 1993.  In 1993, residential
sales  included  a  non-recurring  sale  of  vacant  lots,  which
resulted  in  a  corresponding  one-time  gain  of  approximately
$400,000.   The 687 home sales closed during 1994 represented  an
increase  of 209 homes, or 43.7%, from the 478 home sales  closed
during  1993.  The average price of homes closed during 1994  was
$173,000, compared to $161,000 for 1993, with the average  square
footage  of  homes closed increasing from 1,753 square  feet  per
home in 1993 to 1,800 square feet per home in 1994.  The increase
in  average selling price was primarily due to the product mix of
homes closed during the year.

Cost  of  sales  increased by $41.6 million (69.7%)  in  1994  to
$101.3  million  from  the 1993 level,  and  gross  profit  as  a
percentage of sales decreased by 8.6 percentage points  to  14.6%
from  23.2%.  Margins were weakened under competitive  pressures,
rising short-term interest rates, and the increased percentage of
homes delivered out of delay related sales backlog.  The purchase
price  of  the  homes in backlog were fixed, but the  homes  were
subject   to  increasing  construction  costs  until  they   were
delivered.

Selling expenses increased $2.1 million to $7.0 million from 1993
to  1994.   As a percentage of sales, selling expenses  decreased
from  6.3%  to  5.9% in 1994.  The Company was  able  to  achieve
reduced  selling  expenses  as a percent  of  sales  due  to  the
increase in the number of unit closings in 1994, which absorbed a
greater portion of fixed expenses.  Although approximately 20% of
selling  expenses vary directly with sales levels, the  remaining
costs  are influenced largely by the number of product lines  the
Company  is  offering and by the level of new home  orders.   The
number of product lines offered by the Company doubled to  20  at
the  end  of  1994 from 10 at the end of 1993.   Net  new  orders
remained relatively constant for 1994 as compared to 1993.

General and administrative expenses increased by $1.6 million  to
$6.6 million in 1994.  The increase of $1.6 million for 1994  was
due  to  the  costs of maintaining the additional product  lines,
combined with increased professional fees and staffing costs as a
direct result of the additional regulatory and investor reporting
requirements of public ownership.  The decrease, as a percent  of
sales,  was due primarily to the increased unit closings  in  the
year which provided increased fixed cost absorption.

Minority interest expense increased to $427,000 from $187,000  in
1993.  Pursuant  to the provisions of the partnership  agreement,
limited  partner contributions of $686,000 were received  and  no
distributions were paid during 1994.

The  provision  for income taxes decreased from $2.8  million  in
1993  to  $1.3 million in 1994.  The effective tax rate for  1994
and 1993 (pro forma) was approximately 40%.

Inflation

The  Company, as well as the home-building industry  in  general,
may  be  adversely  affected during periods  of  high  inflation,
primarily  because of higher land acquisition,  land  development
and  construction  costs.  In addition, higher mortgage  interest
rates  may  significantly affect the affordability  of  permanent
mortgage  financing  to prospective purchasers.   Inflation  also
increases the Company's interest costs and the cost of labor  and
materials.   The Company attempts to pass through to  its  buyers
any  increases  in  its costs through increased  selling  prices.
Inflation did not have a material impact on fiscal 1996  results.
In   1995,  delays  experienced  in  obtaining  required  permits
resulted  in  increased construction costs  on  the  fixed  price
homeowner  contracts which made up the Company's  sales  backlog.
These  increased costs, in turn, contributed to  the  decline  in
profit  margins in both the 1995 and 1994 periods.  The Company's
project  development schedule was changed in 1995 to ensure  that
communities  are  not open for sale as early in  the  development
process  as  in the past which should minimize the potential  for
delays  after  the opening and thus the likelihood of  delays  in
delivery  once the house is sold.  Despite such efforts,  if  the
Company  were to experience similar delays, no assurance  can  be
given that inflation would not have a material adverse impact.
<PAGE>
Liquidity and Capital Resources

Net cash provided by or used for operating activities varies from
period  to  period,  due  primarily to  the  Company's  houseline
inventory    activity,   land   acquisition    and    development
requirements,  and  in lesser part to the Company's  net  income.
Net  cash provided by operations for fiscal 1996 was $21 million,
primarily  due to the reduction in inventory as a result  of  the
increased  number  of  closings  combined  with  an  increase  in
accounts  payable and accrued construction costs.  The  cash  was
used  primarily to repay borrowings under the Loan Agreement  (as
hereinafter defined).

On  September  13, 1996 the Company entered into an  Amended  and
Restated  Revolving Credit Loan Agreement (the "Loan Agreement"),
with  two banks that replaced the previous financing arrangements
with the same banks.  The Loan Agreement provides a $50.0 million
line  of  credit.  The borrowings are secured by the real  estate
assets  of  the  Company,  with certain exceptions.    Borrowings
under  the Loan Agreement  bear interest at LIBOR plus 275  basis
points for up to $30 million in borrowings, and prime plus .5% for
borrowings in excess of $30 million, plus certain customary fees.
The  Loan  Agreement is scheduled to mature on February 1,  1997.
Available borrowings under the Loan Agreement are reduced by  the
amount  of  Letters  of Credit outstanding.  The  Loan  Agreement
includes   certain  customary  representations   and   covenants,
including  restrictions on the Company's ability to pay dividends
and maintenance of certain financial ratios. The Company believes
that it will be able to either extend and revise the terms of the
loan  agreement beyond February 1997 or negotiate  a  replacement
facility,  but  there can be no assurance of  such  extension  or
replacement  facility.  Each installment under  the  subordinated
notes  payable to the Principal Shareholder (see Note  2  to  the
Notes  to  Consolidated Financial Statements) is required  to  be
placed  in  escrow with the banks, and may only be released  upon
demonstration   of  Company  compliance  with   the   contractual
provisions of the Loan Agreement.

As  of  December 2, 1996, the Company had borrowed $29.8  million
under  the  Loan  Agreement and had $9.8 million  of  outstanding
letters of credit, leaving $10.4 million as available for  future
borrowings.   The Company believes that the current facility  (as
extended  or replaced with a similar facility) together with  its
cash  flow  from operations will be sufficient to fund  projected
near  term  requirements,  including land  acquisition   and  any
relevant market opportunities as well as its plans to expand  its
inventory of developed land.

Item 8.  Financial Statements and Supplementary Data

The  response to this item is submitted as a separate section  of
this report beginning on page F-1.


Item 9.Changes   in   and   Disagreements  with  Accountants   on
       Accounting and Financial Disclosure

None.
<PAGE>
                            PART III

Item 10.  Directors and Executive Officers of the Registrant

Information  with respect to the directors and  officers  of  the
Company  is  hereby  incorporated  herein  by  reference  to  the
sections,  "Election of Directors-Nominees,"  "-Other  Directors"
and  "Executive Officers," in the Company's Proxy Statement which
is  expected  to  be  filed  with  the  Securities  and  Exchange
Commission  (the "Commission") in definitive form no  later  than
January 28, 1997.

Information with respect to required Section 16(a) disclosure  is
hereby incorporated herein by reference to the section "Executive
Officers'-Compliance  with  Section  16(a)  of   The   Securities
Exchange Act of 1934," in the Company's Proxy Statement which  is
expected  to be filed with the Commission in definitive  form  no
later than January 28, 1997.

Item 11.  Executive Compensation

Information  with  respect to executive  compensation  is  hereby
incorporated  herein by reference to the sections,  "Election  of
Directors",   "Compensation   of   Directors",   and   "Executive
Compensation," in the Company's Proxy Statement which is expected
to  be filed with the Commission in definitive form no later than
January 28, 1997.

Item  12.   Security Ownership of Certain Beneficial  Owners  and
Management

Information  with  respect  to  security  ownership  of   certain
beneficial owners and management is hereby incorporated herein by
reference   to  the  section  "Security  Ownership  of  Principal
Shareholders  and Management," in the Company's  Proxy  Statement
which  is  expected to be filed with the Commission in definitive
form no later than January 28, 1997.

Item 13.  Certain Relationships and Related Transactions

Information  with  respect to certain relationships  and  related
transactions  is hereby incorporated herein by reference  to  the
section  "Certain Transactions," in the Company's Proxy Statement
which  is  expected to be filed with the Commission in definitive
form no later than January 28, 1997.
<PAGE>
                             PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on
Form 8-K

(a)  (1) and (2) The response to this portion of Item 14 is submitted as a 
                 separate section of this report beginning on page F-1.

     All  other  schedules  have been omitted  because  they  are
     inapplicable, not required, or the information  is  included
     elsewhere in the consolidated financial statements or  notes
     thereto.

     (3)  Exhibits:

          The  response  to  this Item is  incorporated  by
          reference to Item 14(c) below.

(b)  No  report  on Form 8-K was filed by the Company during  the
     last quarter of the period covered by this report.

(c)  The  exhibits  listed below are filed with  this  report  or
     incorporated by reference, as set forth below.  The  Company
     will  furnish to any shareholder, upon written request,  any
     of   the   exhibits  listed  below  upon  payment  by   such
     shareholder   of  the  Company's  reasonable   expenses   in
     furnishing any such exhibit.

     Exhibit
     Number                               Document Description
      3.1*   Amended and Restated Articles of Incorporation of the Registrant.
      3.2*     Amended and Restated Bylaws of the Registrant.
      4.1***   Specimen  stock certificate representing Common Stock.
      4.2      Amended and Restated Revolving Credit Loan Agreement dated
               September 13, 1996
     10.1**    The Sundance Homes, Inc. 1993 Stock Incentive Plan.
     10.2**    The Sundance Homes, Inc. 1993 Directors' Option Plan.
     10.3**    Profit Sharing and Savings Plan.
     10.4**    Form of Tax Indemnification Agreement.
     10.5**    Form of Director's Indemnification Agreement.
     10.6**    Form of Dividend Note.
     10.8***   Lease  Agreement between the  Company  and The Mutual Life
               Insurance Company of New York
     10.9***   Employment Letter for Arthur L. Titus, dated April 10, 1995
     10.10     Employment Letter for Jon Tilkemeier, dated September 10, 1996
     10.11     Employment Letter for Joseph Atkin, dated  November 27, 1996
     10.12*****First Amendment to the Sundance Homes, Inc. Stock Incentive
               Plan
     10.13*****First  Amendment  to  the  Sundance  Homes,  Inc. Directors'
               Stock Option Plan
     21.0      List of Subsidiaries.
     23.1      Consent of Price Waterhouse LLP.
     27.1      Financial Data Schedule.

            *     Incorporated  by  reference  to  the  Company's
            Registration Statement on Form S-8, Registration  No.
            33-96546.
               **  Incorporated  by reference to   the  Company's
            Registration  Statement  on  Form  S-1,  Registration
            Statement No. 33-60988.
            ***   Incorporated  by  reference  to  the  Company's
            Annual  Report  on  Form 10-K for  the  period  ended
            December 31, 1994.
            ****  Incorporated  by  reference  to  the  Company's
            Transition  Report on Form 10-K for the period  ended
            September 30, 1995.
            *****      Incorporated by reference to the Company's
            Registration Statement on Form S-8, Registration  No.
            333-11087
(d)   The  response to this Item is incorporated by reference  to
Item 14(a)(2).
<PAGE>                                
                           SIGNATURES


Pursuant  to  the  requirements of Section 13  or  15(d)  of  the
Securities  Exchange Act of 1934, the registrant has duly  caused
this  amendment  to be signed on its behalf by  the  undersigned,
thereunto duly authorized, on the 23rd day of December, 1996.

            SUNDANCE HOMES, INC.

          By:      /s/   Arthur L. Titus
             Arthur  L.  Titus,  President  and  Chief  Operating
             Officer and Director



Pursuant  to the requirements of the Securities Exchange  Act  of
1934,  this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.

   Signature                      Title                         Date
                                              
                                              
                                              
                       Chairman of the Board and Chief    December 23, 1996
/s/Maurice Sanderman         Executive Officer
Maurice Sanderman      (Principal Executive,Financial
                          and Accounting Officer)
                                              
                                              
                       President, Chief Operating         December 23, 1996
/s/Arthur L. Titus        Officer and Director
Arthur L. Titus                               
                                              
                                              
/s/Charles Engles                Director                 December 23, 1996
Charles Engles                                
                                              
                                              
/s/Dennis Bookshester            Director                 December 23, 1996
Dennis Bookshester
                                              
                                              
/s/Gerald Ginsburg               Director                 December 23, 1996 
Gerald Ginsburg                               
<PAGE>                                              
                      SUNDANCE HOMES, INC.
                 ITEM 8, ITEM 14(a) (1) and (2)
           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Accountants                                        F-2

Consolidated Balance Sheets as of September 30, 1996 and
September 30, 1995                                                       F-3

Consolidated Statements of Income for the Year Ended
September 30, 1996, the Nine Months Ended September 30, 1995
and the Year Ended December 31, 1994                                     F-4

Consolidated Statements of Changes in Shareholders' Equity for
the Year Ended September 30, 1996, the Nine Months Ended
September 30, 1995, and the Year Ended December 31, 1994                 F-5

Consolidated Statements of Cash Flows for the Year Ended
September 30, 1996, the Nine Months Ended  September 30, 1995,
and the Year Ended December 31, 1994                                     F-6

Notes to Consolidated Financial Statements                               F-7

Financial Statement Schedules:

   Schedule IX-Short-term Borrowings                                     F-17

<PAGE>


                REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and
Shareholders of Sundance Homes, Inc.

In  our opinion, the consolidated financial statements listed  in
the  index appearing on page F-1, present fairly, in all material
respects, the financial position of Sundance Homes, Inc. and  its
subsidiaries  at September 30, 1996 and September 30,  1995,  and
the results of their operations and their cash flows for the year
ended  September 30, 1996, the nine-month period ended  September
30, 1995 and the year ended December 31, 1994, in conformity with
generally   accepted  accounting  principles.   These   financial
statements  are  the responsibility of the Company's  management;
our  responsibility is to express an opinion on  these  financial
statements based on our audits.  We conducted our audits of these
statements   in  accordance  with  generally  accepted   auditing
standards  which require that we plan and perform  the  audit  to
obtain   reasonable   assurance  about  whether   the   financial
statements are free of material misstatement.  An audit  includes
examining,  on a test basis, evidence supporting the amounts  and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating  the  overall  financial statement  presentation.   We
believe  that  our  audits  provide a reasonable  basis  for  the
opinion expressed above.





/s/ Price Waterhouse LLP
Chicago, Illinois
December 10, 1996
<PAGE>
<TABLE>
        SUNDANCE HOMES, INC.
     CONSOLIDATED BALANCE SHEETS
  (in thousands, except share data)
<CAPTION>                                                         
                                              September 30,    September 30,
                                                  1996             1995
<S>                                           <C>              <C>                                                           
ASSETS                                                          
                                                                
Cash and cash equivalents                     $      4,501     $      4,687
Real estate inventories                             76,101           86,434
Prepaid expenses and other assets                      751            1,029
Deferred income taxes                                  461               -
Property and equipment, net                          2,520            2,066
Deferred project start-up costs                      2,072            2,700
Income tax receivable                                   -             1,964
                                                                 
   TOTAL ASSETS                               $     86,406     $     98,880
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY                            
                                                                
Accounts payable and accrued                  $     23,067     $     16,516
construction costs
Other accrued expenses                               6,182            5,115
Customer deposits                                    1,433            2,649
Notes and mortgages payable                         23,027           42,787
Deferred income taxes                                   -               201
Subordinated notes payable                           4,193            4,193
                                                                
   Total liabilities                                57,902           71,461
                                                                
Minority interest                                      111              266
                                                                
Shareholders' equity:                                           
  Preferred stock, $0.01 par value,                             
1,000,000 shares authorized, none                        -               -
issued or outstanding
  Common stock, $0.01 par value,                                
20,000,000 shares authorized;                                   
7,807,000 shares issued at September                    78               78
30, 1996 and 7,805,000 shares
issued at September 30, 1995
  Additional paid-in capital                        26,977           26,972
  Retained earnings                                  1,338              103
                                                                
   Total shareholders' equity                       28,393           27,153
                                                                
TOTAL LIABLILITIES AND SHAREHOLDERS' EQUITY   $     86,406     $     98,880

The accompanying notes are an integral part of these financial statements.

</TABLE>
<PAGE>
<TABLE>                                                                
                                
                       SUNDANCE HOMES, INC.
                CONSOLIDATED STATEMENTS OF INCOME
              (in thousands, except per share data)
<CAPTION>                                 
                                                             
                                                               
                                       Year ended      Nine months       Year ended
                                      September 30,      ended         December 31,
                                                      September 30,   
<S>                                   <C>             <C>              <C>
Residential sales                     $ 120,948       $ 63,811         $ 118,659
Cost of sales                           107,057        107,057            58,852
Reduction in carrying value of
   real estate assets                        -           3,657                -  
                                                                  
Gross profit                             13,891          1,302            17,328

Selling expenses                          6,968          4,915             6,959
General and administrative expenses       4,940          3,370             6,581
Other (income) expense, net                (193)            68               145

Income (loss) before minority                                     
   interest and provision (benefit)
   forincome taxes                        2,176         (7,051)            3,643
Minority interest                           117            (24)              427

                                                                  
Income (loss) before provision
(benefit) for income taxes                2,059         (7,027)            3,216
Provision (benefit) for income taxes        824         (2,811)            1,286

                                                                  
Net income (loss)                       $ 1,235        $(4,216)          $ 1,930
                                                                  
Net income (loss) per share               $0.16         ($0.54)            $0.25
                                                                  
Weighted average number                                           
of shares outstanding                   7,806          7,805            7,825
  
The accompanying notes are an integral part of these financial statements.

</TABLE>
<PAGE>                                                                  

                      SUNDANCE HOMES, INC.
   CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                
                         (in thousands)
                                                                
<TABLE>                                
                                   Common Stock            Additional
                                                            Paid-In     Retained     
                                Shares        Amount        Capital     Earnings          Total
                                                                                            
<S>                              <C>           <C>         <C>           <C>           <C>     
Balance at December 31, 1993     7,805         $ 78        $ 26,972      $ 2,389       $  29,439
                                                              
     Net income                                                            1,930           1,930
                                                              
Balance at December 31, 1994     7,805           78          26,972        4,319          31,369
                                                              
     Net loss                                                             (4,216)         (4,216)
                                                              
Balance at September 30, 1995    7,805           78          26,972          103          27,153
                                                             
     Exercise of stock options       2                            5                            5
                                                              
     Net income                                                            1,235           1,235
                                                              
Balance at September 30, 1996    7,807          $78         $26,977       $1,338         $28,393
</TABLE>
<PAGE>                                                              

                        SUNDANCE HOMES, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (in thousands)
<TABLE>                                  
                                                           
                                                              Year ended      Nine months            Year
                                                             September 30,      ended               ended
                                                                             September 30,     December 31,
                                                                 1996           1995                 1994           
<S>                                                          <C>             <C>               <C>            
Operating activities:                                                
   Net income (loss)                                         $   1,235       $ (4,216)         $ 1,930
   Adjustments to reconcile net loss to net cash                                      
      provided by (used for) operating activities:
        Depreciation and amortizaiton                              848            569              905
        Reduction in carrying value of real estate assets           -           3,657               -
        Minority interest                                          117            (24)             427
        Deferred income taxes                                     (461)        (1,023)             186
        Loss on disposition of property and equipment               -              -               137
        Changes in operating assets and liabilities:
           Real estate inventories                              10,333         (2,878)         (21,351)
           Prepaid expenses and other assets                       278           (148)            (370)
           Income tax receivable                                 1,964         (1,964)              -
           Deferred project start up costs                         628            626             (429)
           Accounts payable and accrued construction costs       6,551         (3,737)           4,334
           Other accrued expenses                                  866          1,333            3,210
           Customer deposits                                    (1,216)          (108)            (330)
                                                                     
Net cash provided by (used for) operating activities            21,143         (7,913)         (11,351)
                                                                     
Investing activities:                                                
          Property and equipment, net                           (1,292)          (244)          (2,074)
          Exercise of stock options                                 (5)             -                -
                                                                     
Net cash used for investing activities                          (1,297)          (244)          (2,074)
                                                                 
Financing activities:                                                
   Borrowings under line of credit                              99,392         69,750           95,439
   Repayments of line of credit                               (115,691)       (58,199)         (87,541)
   Borrowings under notes payable                                1,340            535            3,726
   Repayments of notes payable                                  (4,801)        (3,579)          (4,217)
   Contributions from minority interest                             73            111              686
   Distributions to minority interest                             (345)          (870)              - 
                                                                     
Net cash (used for) provided by financing activities           (20,032)         7,748            8,093
                                                                     
Net decrease in cash and cash equivalents                         (186)          (409)          (5,332)
                                                                     
Cash and cash equivalents:                                           
   Beginning of period                                           4,687           5,096          10,428

   End of period                                             $   4,501       $   4,687       $   5,096

The accompanying notes are an integral part of these financial statements.

</TABLE>
<PAGE>
                      SUNDANCE HOMES, INC.
                                
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
                                
Note 1 - Summary of Significant Accounting Policies:


 Nature of business
                                
Sundance  Homes, Inc. is engaged in the development of  land  and
construction  of  attached and detached single-family  homes  and
urban  residential buildings for entry-level and first time move-
up buyers in the Chicago metropolitan area.

Year End Change

In  January  1995,  the Board of Directors  of  the  Company  (as
defined  hereafter) adopted a resolution providing that the  date
for  the  end  of the fiscal year of the Company be changed  from
December  31  to  September 30.  As a result, the  period  ending
September 30, 1995 contains nine months of operations.

Principles of consolidation

The  consolidated financial statements include  the  accounts  of
Sundance   Homes,   Inc.,  its  wholly-owned  subsidiaries   (the
"Company")  and  its  investment  in  a  majority-owned   limited
partnership.    All   significant   intercompany   accounts   and
transactions have been eliminated in consolidation.

Revenue recognition

Residential  sales are recognized at closing when  title  to  the
home  has passed to the buyer.  The Company's homes are generally
offered for sale in advance of their construction.  To date, most
of  the Company's homes have been sold pursuant to standard sales
contracts  entered  into prior to commencement  of  construction.
The  Company's  standard sales contracts  generally  require  the
customer  to  make  an earnest money deposit.  This  deposit  may
range from a nominal amount for an FHA or VA financed purchase to
5%  to  10%  of the purchase price for a buyer using conventional
financing.

Real estate inventories and cost of sales

Real  estate inventories are carried at cost, which is less  than
estimated   net   realizable  value,  and  include   land,   land
development,  direct  and  certain indirect  construction  costs,
interest and real estate taxes.

At the time of revenue recognition, cost of sales is charged with
the  actual  construction  costs incurred  and  any  estimate  to
complete, plus an allocation of the total estimated cost of  land
and  land development, interest, real estate taxes and any  other
capitalizable  common  costs based on the  relative  sales  value
method of accounting.

The  Company  generally provides a one year limited  warranty  of
workmanship and materials and a two year limited warranty on  the
working  systems for each of its homes.  Accordingly, a  warranty
reserve,  based  on  the  Company's  historical  experience,   is
provided as residential sales are closed; this reserve is reduced
by the cost of subsequent work performed.

Deferred project start-up costs

Deferred   project  start-up  costs  include  forward   planning,
architectural design costs, and other miscellaneous costs,  other
than  normal period expenses, incurred prior to a project's first
closing.  Such amounts are capitalized as incurred and charged to
cost of sales as related home sales are closed.
<PAGE>
Interest capitalization

Interest  and  related  debt issuance costs  are  capitalized  to
qualifying  real  estate inventories as incurred,  in  accordance
with  Statement of Financial Accounting Standards (SFAS) No.  34,
"Capitalization of Interest Cost", and charged to cost  of  sales
as revenue from residential sales is recognized.

Property and equipment

Property  and  equipment  are carried at  cost  less  accumulated
depreciation  and are depreciated using accelerated methods  over
the  estimated useful lives of the assets, except for model  home
upgrades  and  furnishings which are amortized  as  related  home
sales  in  a  development are closed.  Significant additions  and
improvements are capitalized, while expenditures for  maintenance
and  repairs are charged to operations as incurred.  The cost and
accumulated  depreciation  of  property  and  equipment  sold  or
retired  are  removed  from  the  respective  accounts  and   the
resultant  gains  or  losses, if any,  are  included  in  current
operations.

Advertising costs

The  Company attracts initial interest in its projects through  a
comprehensive advertising program using media such as newspapers,
direct  mail, telemarketing, billboards and, to a lesser  extent,
radio  and  television. Advertising costs, which are expensed  as
incurred, aggregated approximately $1.9 million, $1.1 million and
$1.5  million during the year ended September 30, 1996, the  nine
months  ended September 30, 1995 and the year ended December  31,
1994,  respectively.

Income taxes

Deferred  income  taxes  are  determined  under  the  asset   and
liability method in accordance with SFAS No. 109 "Accounting  for
Income  Taxes".  Under SFAS No. 109, deferred income taxes  arise
from temporary differences between the income tax basis of assets
and  liabilities  and their reported amounts in the  consolidated
financial statements.

Cash and equivalents

For  purposes of reporting cash flows, the Company considers  all
highly  liquid  investments with an original  maturity  of  three
months or less to be cash equivalents.
<TABLE>
Supplemental disclosures of cash flow information are as  follows
(in thousands):
<CAPTION>
                         Year ended       Nine months ended      Year ended
                        September 30,       September 30,       December 31,
                            1996                1995                1994
                                             
   <S>                  <C>               <C>                   <C>
   Cash paid for:                               
        Interest        $3,536            $3,096                $2,395
        Income taxes        -                150                   741
</TABLE>

Use of estimates

The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the year then
ended.  Actual results could differ from those estimates.
<PAGE>
Note 2 - Initial Public Offering of Common Stock:
                                
On July 9, 1993, the Company completed an initial public offering
of 3,105,000 shares of its common stock.  The net proceeds of the
offering  aggregated  approximately $22  million.   Approximately
$15.7  million of the net proceeds were used to repay outstanding
indebtedness  under the Company's then existing land acquisition,
construction  and working capital loans, with the remaining  $6.3
million used to purchase land for then current developments.
                                
Prior to the completion of the offering, the Company consisted of
several  S Corporations.  Effective just prior to July  9,  1993,
the  Company  was recapitalized and reorganized  into  a  parent-
subsidiary  structure,  thereby  terminating  its  S  Corporation
status.   The  Company  declared  aggregate  distributions  of  S
Corporation earnings to its Principal Shareholder in an aggregate
amount   such  that  beginning  shareholders'  equity  as   a   C
Corporation would be $5 million.  During the twelve months  ended
December 31, 1993, such distributions aggregated $9.1 million, of
which  $4.9  million  was  paid  out  of  available  cash,  while
remaining  amounts  were paid in the form  of  promissory  notes,
which  are  subordinate to the Company's bank indebtedness,  bear
interest at 7 1/2% per annum and originally matured in two  equal
annual installments on the first and second anniversaries of  the
offering.  On September 30, 1996, the maturity date of the  notes
was  extended  to  September 30, 1997.   Payment  of  the  annual
installments  is  subject  to  certain  restrictions  under   the
Company's Revolving Credit Loan Agreement (see Note 5 - Notes and
Mortgages  Payable).   Retained earnings at  September  30,  1996
represents net income and loss of the Company since July 9, 1993.

The  unaudited pro forma statement of income data  are  based  on
historical  net  income, as adjusted to reflect a  provision  for
income  taxes,  as if the Company had been a C Corporation  since
inception.

Note 3 - Real Estate Inventories:
<TABLE>
Real estate inventories are summarized as follows (in thousands):
<CAPTION>
                                         September 30,      September 30,
                                             1996               1995
     <S>                                 <C>                <C>  
     Work-in-process:                      
          Land and development           $49,382            $57,736
          Construction inventory          20,226             16,275
     Completed homes:                               
          Models                           6,493             12,423
                                         $76,101            $86,434
</TABLE>
Completed  homes  include models constructed  to  help  market  a
development.   Completed homes include allocations  of  land  and
development and other allocable costs.
<TABLE>
Capitalized  interest is included in real estate  inventories  as
follows (in thousands):
<CAPTION>
                                              Year Ended            Nine Months Ended      Year Ended
                                              September 30, 1996    September 30, 1995   December 31, 1994
<S>                                           <C>                   <C>                  <C>
Interest capitalized, beginning of period     $5,418                $3,255               $2,038
Interest incurred and capitalized              3,581                 3,839                3,872
Interest amortized to cost of sales           (3,572)               (1,676)              (2,655)
Interest capitalized, end of period           $5,427                $5,418               $3,255
</TABLE>
<PAGE>

During  the second quarter of 1995, the Company recorded  a  $3.7
million  reserve  to reflect the reduction in carrying  value  of
certain  real  estate  inventories.   The reduction  included  an
adjustment  of  $2.9  million (before income  taxes)  related  to
management's  decision  not to continue  development  of  certain
property which the Company owns.  The Company had chosen  not  to
develop  this property as it identified more relevant development
opportunities which were consistent with the Company's  long-term
market  strategy.  Also contributing to the loss for  the  period
was the write-off of capitalized costs related to certain product
lines which were discontinued.

A  reserve  is provided when the carrying amount of  any  of  the
Company's  investments  exceeds it's net realizable  value.   Net
realizable value represents the expected selling price a property
will  bring in the open market reduced by (a) the estimated  cost
to  complete and improve such property to the condition  expected
in  determining the selling price, (b) disposition costs, and (c)
estimated  costs  to  hold the property to  the  point  of  sale,
including  interest  carrying  costs  and  other  net  cash  flow
requirements of the project.


Note 4 - Property and Equipment:
<TABLE>
Property and equipment are summarized as follows (in thousands):
<CAPTION>
                                              September 30,  September 30,
                                               1996            1995
     <S>                                      <C>            <C>
     Model home upgrades and furnishings      $2,941         $2,612
     Equipment and furniture                   2,740          1,884
     Vehicles                                    402            286
     Leasehold improvements                       41             41
                                               6,124          4,823
     Accumulated depreciation                  3,604          2,757
                                              $2,520         $2,066
</TABLE>
Note 5 - Notes and Mortgages Payable:
<TABLE>
Notes  and  mortgages  payable  are  summarized  as  follows  (in
thousands):
<CAPTION>
                                           September 30,    September 30,
                                               1996           1995
     <S>                                   <C>              <C>                       
     Revolving line of credit                $19,225        $35,523
     Notes payable to land sellers             3,802          7,264
                                             $23,027        $42,787
</TABLE>
<PAGE>
On  September  13, 1996 the Company entered into an  Amended  and
Restated  Revolving Credit Loan Agreement (the "Loan Agreement"),
with  two banks that replaced the previous financing arrangements
with the banks.  The Loan Agreement provides a $50.0 million line
of  credit.  The borrowings are secured by the real estate assets
of  the  Company, with certain exceptions.  Borrowings under  the
Loan  Agreement bear interest at LIBOR plus 275 basis points  for
borrowings  up to $30 million, and prime plus .5% for  borrowings
in  excess of $30 million, plus certain customary fees.  The Loan
Agreement is scheduled to mature on February 13, 1997.  Available
borrowings under the Loan Agreement are reduced by the amount  of
letters  of  credit  outstanding.  The  Loan  Agreement  includes
certain   customary  representations  and  covenants,   including
restrictions  on  the  Company's ability  to  pay  dividends  and
maintenance  of  certain financial ratios.  The Company  believes
that it will be able to either extend and revise the terms of the
loan  agreement beyond February 1997 or negotiate  a  replacement
facility,  but  there can be no assurance of  such  extension  or
replacement  facility.  Each installment under  the  subordinated
notes  payable to the Principal Shareholder (see Note  2  to  the
Notes  to Consolidated Financial  Statements) is required  to  be
placed  in  escrow with the banks, and may only be released  upon
demonstration   of  Company  compliance  with   the   contractual
provisions of the Loan Agreement.

As  of September 30, 1996, the Company had borrowed $19.2 million
under  the  Loan  Agreement and had $9.1 million  of  outstanding
letters of credit, leaving $21.7 million as available for  future
borrowings.   The Company believes that the current facility  (as
extended  or replaced with a similar facility) together with  its
cash  flow  from operations will be sufficient to fund  projected
near  term requirements and any relevant market opportunities  as
well as its plans to expand its inventory of developed land.

Notes  payable  to  land sellers bear interest  at  annual  rates
ranging from zero to prime plus three quarters of one percent and
are  normally  repaid through application of agreed upon  amounts
from the proceeds of individual home sale closings.
<TABLE>
Maturities  of notes and mortgages payable in future periods  are
as follows (in thousands):
<CAPTION>
                                           Year ending
                                           September 30,
               <S>                         <C>
               1997...................      20,964
               1998...................         780
               1999...................         859
               2000...................         424
                                           $23,027
</TABLE>
Interest  and related debt issuance costs incurred, all of  which
were  capitalized, during the year ended September 30, 1996,  the
nine  months ended September 30, 1995 and the year ended December
31, 1994, aggregated approximately $3.5 million, $3.8 million and
$3.9 million, respectively.
<PAGE>
Note 6 - Income Taxes:
<TABLE>
The  provision  (benefit) for income taxes  was  as  follows  (in
thousands):
<CAPTION>
                    Year Ended             Nine Months Ended      Year Ended
                    September 30, 1996     September 30, 1995     December 31, 1994  
                            
<S>                 <C>                    <C>                    <C>       
Current
    
     Federal        $105                   ($1,521)               $916
     
     State            35                      (267)                205
    
                     140                    (1,788)              1,121
    
Deferred                                                 
    
     Federal         563                      (869)                134
     
     State           121                      (154)                 31
    
                     684                    (1,023)                165
     Total          $824                   ($2,811)             $1,286
</TABLE>
<TABLE>
Reconciliations of the statutory Federal income tax rate  of  34%
to the effective income tax rate are as follows (in thousands):
<CAPTION>
                                       Year Ended         Nine Months Ended     Year Ended
                                    September 30, 1996    September 30, 1995   December 31, 1994
     <S>                            <C>                   <C>                  <C> 
     Income taxes at the Federal    $700                  ($2,390)             $1,093
          statutory rate
     State income taxes, net of      150                     (279)                155
          Federal benefit
     
     Other                           (26)                    (142)                 38
          Total                      $824                 ($2,811)             $1,286
</TABLE>
<PAGE>
Note 6 - Income Taxes (cont)
<TABLE>
The  consolidated balance sheets included the following  deferred
tax (assets) or deferred tax liabilities:
<CAPTION>
                                           September 30,    September 30,    December 31,
                                           1996             1995             1994
     <S>                                   <C>              <C>              <C>    
     Deferred project start-up costs         $843           $1,017           $1,325

     Real estate inventories               (1,378)          (1,008)             122

     Partnership book to tax differences      176              268                1

     Accrued expenses                        (266)            (159)             (96)

     Depreciation of property and             164               61             (151)
     equipment

     Other                                     -                22               23
                                            $(461)            $201           $1,224
</TABLE>

The Company has entered into a tax indemnification agreement with
the  Principal  Shareholder of the Company  which  provides  for,
among   other  things,  the  indemnification  of  the   Principal
Shareholder  for any losses or liabilities with  respect  to  any
additional  taxes (including interest, penalties and legal  fees)
resulting  from  the Company's operations during  the  period  in
which it was an S Corporation.

Note 7 - Minority Interest:

During 1993, one of the Company's subsidiaries, acting as general
partner  with  a 75% ownership interest, entered into  a  limited
partnership with a land seller.  Under the terms of this  limited
partnership  agreement, the Company purchased the land  from  the
seller  for approximately $1.4 million, payable over the term  of
the  agreement as home sales are closed.  This partnership  began
closing homes in March, 1994.

The  income(loss)  from the limited partnership's  operations  is
allocated  to  the general and limited partner based  upon  their
relative ownership interests.  Distributions with respect thereto
are paid as outlined in the agreements.
<PAGE>
A reconciliation of the minority interest balance as presented in
the Consolidated Balance Sheets is as follows (in thousands):
<TABLE>
      <S>                                                         <C>   
      Minority interest in net assets at December 31, 1993.....    $(64)
      Contributions............................................     686
      Limited partner's interest in 1994 net income of the
         partnership...........................................     427
      Distributions during 1994................................      --
      Minority interest in net assets at December 31, 1994.....   1,049
         Contributions.........................................     111
      Limited partner's interest in 995 net loss of the             
         partnership...........................................     (24)
      Distributions during 1995................................    (870)
      Minority interest in net assets at September 30, 1995....     266
         Contributions.........................................      73
      Limited partner's interest in 1996 net income of the
         partnership...........................................     117
      Distributions during 1996................................    (345)
      Minority interest in net assets at September 30, 1996....    $111
</TABLE>
Note 8 - Related Party Transactions:
The  Principal  Shareholder  of  the  Company  owned  5%  of  the
outstanding common stock and was a director of National  Building
Systems,  a  subcontractor  which  performed  services  for   the
Company.   As  of December 31, 1994, the Company  was  no  longer
contracting services with National Building Systems.

Services  contracted and materials purchased  from  this  related
party aggregated approximately $2.3 million during the year ended
December  31, 1994.  At September 30, 1996, there was  no  amount
due  this  related party.  At September 30, 1995, the amount  due
this  related  party  aggregated  $142,501  and  is  included  in
accounts  payable  and accrued construction  liabilities  in  the
accompanying consolidated balance sheets.

Note 9 - Stock Incentive and Directors Option Plans:
Stock Incentive Plan
The  Board  of  Directors and shareholders adopted  the  Sundance
Homes,  Inc.  Stock Incentive Plan (the "Stock Incentive  Plan"),
effective  as  of  April  7,  1993.  The  purpose  of  the  Stock
Incentive  Plan  is to enable officers and key employees  of  the
Company to participate in the Company's future and to enable  the
Company  to  attract and retain these persons  by  offering  them
proprietary  interests in the Company.  The Stock Incentive  Plan
is  administered  by  the  Company's compensation  committee  and
authorizes  the issuance of up to 625,000 shares of common  stock
pursuant  to  the  grant  or exercise  of  stock  options,  stock
appreciation rights, restricted stock or deferred stock.

Prior  to  the  offering in July 1993, the Company granted  stock
options  under  the  Stock  Incentive  Plan  to  certain  of  its
employees who were not previously shareholders of the Company  to
purchase  up  to 250,000 shares of common stock in the  aggregate
for  a  purchase  price  per share equal to  the  initial  public
offering price.  Options granted to these officers will vest  25%
per year for four years, and will expire after ten years.
<PAGE>
As  of  September  30,  1996, options  for   56,625  shares  were
exercisable.
<TABLE>
A summary of changes in stock options outstanding is as follows:
<CAPTION>
                                           Options     Option price
                                                       (per share)
     <S>                                  <C>          <C>
     1993                                      
     Granted                               250,000        $8.00
                                  
     Terminated                           (190,000)         
                               
     Balance of 1993 Issued Shares          60,000        $8.00
     
     1994                                      
     Granted                               106,500      $7.25-11.25
     
     Terminated                            (70,000)     $8.00-11.25
 
     Balance of 1994 Issued Shares          36,500      $7.25-11.25

     1995                                      
     Granted                               208,500      $2.375-3.25
                             
     Terminated                            (47,000)       $2.375
                                
     Balance of 1995 Issued Shares         161,500      $2.375-3.25

     1996                                      
     Granted                               111,500      $1.625-3.625
       
     Terminated                                --           

     Balance of 1996 Issued Shares         111,500      $1.625-3.625

     Total Outstanding Granted Shares      369,500      $1.625-11.25
</TABLE>

Directors Option Plan

Outside Directors are granted options to acquire 5,000 shares  of
Common Stock on each of:  (1) the date on which a person is first
elected  as a Director, (2) the date of the first annual  meeting
of  shareholders held subsequent to such person's  election  and,
(3)  the  date  of each succeeding annual meeting of shareholders
after  which such person is still serving as a director  (with  a
limit  of  options  to  acquire a total of 25,000  shares  to  be
granted to any Outside Director).  All options granted under  the
Directors' Plan are exercisable on the one year anniversary  date
of the grant and, at a price per share equal to the closing price
of  the Common Stock as reported on the Nasdaq National Market on
the  date of grant or, if the market is closed on such date,  the
next business day.  Once granted, options may not be canceled.

During  1996,  the  Company  granted  stock  options  under   the
Directors Plan to purchase up to 15,000 shares of common stock in
the aggregate for a purchase price per share of $2.00.

During  1995,  the  Company  granted  stock  options  under   the
Directors Plan to purchase up to 20,000 shares of common stock in
the  aggregate for a purchase price per share ranging from $2.625
to  $3.375.  During 1994, the Company granted stock options under
the  Directors  Plan to purchase up to 15,000  shares  of  common
stock  in  the  aggregate for a purchase price per share  ranging
from  $7.25  to  $10.00.  During 1993, the Company granted  stock
options  under the Directors Plan to purchase up to 5,000  shares
of  common stock in the aggregate for a purchase price per  share
equal  to  $9.25.  As of September 30, 1996, options  for  40,000
shares were exercisable.
<PAGE>
Note 10 - Employee Benefit Plan:

The   Company  maintains  a  contributory  profit  sharing   plan
established pursuant to the provisions of Section 401(k)  of  the
Internal  Revenue  Code  which provides retirement  benefits  for
eligible  employees  of  the Company and its  subsidiaries.   The
Company may make annual discretionary contributions  to the plan.
There  were no discretionary contributions during the year  ended
September 30, 1996, the nine months ended September 30, 1995, and
the year ended December 31, 1994.

Note 11 - Commitments and Contingencies:

The  Company  is  frequently required,  in  connection  with  the
development  of  its  projects, to obtain  performance  or  other
maintenance  bonds  or letters of credit in  lieu  thereof.   The
amount  of  such  obligations outstanding at any time  varies  in
connection with the Company's pending development activities.  In
the  event any such obligations are drawn upon, the Company would
be obligated to reimburse the issuing surety company or bank.  At
September  30,  1996, there were approximately $11.6  million  in
performance  or maintenance bonds and approximately $9.1  million
of letters of credit outstanding for such purposes.

The  Company  currently leases its office space  under  a  5-year
renewable  lease.   Through September 1994,  the  Company  leased
office  space  under cancelable month-to-month  leases.   Certain
equipment is also currently leased under non-cancelable operating
leases.   Rent  expense  under such leases  aggregated  $380,000,
$506,000  and $238,000 during the year ended September 30,  1996,
the  nine  months  ended September 30, 1995 and  the  year  ended
December 31, 1994, respectively.

The  Company  is  involved in various routine  legal  proceedings
incidental  to  the  conduct  of its business.   Specifically,  a
lawsuit   has  been  brought  against  the  Company  and  certain
directors  and employees of the Company by the Board of  Managers
of  Parkside on the Green Condominium Association.  The complaint
seeks  damages  against  the  Company  for  alleged  construction
defects in the approximate amount of $1.6 million, together  with
punitive damages against the named individuals for alleged breach
of  fiduciary duty.  The Company has assumed the defense of  this
lawsuit  on behalf of the individual defendants.  The Company  is
defending the lawsuit vigorously.  Management believes that  none
of these legal proceedings will have a material adverse impact on
the financial condition or results of operations of the Company.

Note 12 - Quarterly Results Of Operation (unaudited):
<TABLE>
The  following table reflects the results of operations  for  the
Company  during the four quarters of 1996 and the three  quarters
of 1995 (dollars in thousands):
<CAPTION>
                              Sept. 30,  June 30,  Mar. 31,   Dec. 31,  Sept. 30,  June 30,  Mar. 31,
                                1996       1996       1996      1995      1995     1995(1)    1995
<S>                           <C>        <C>       <C>        <C>       <C>        <C>       <C>   
Residential Sales             $40,653    $28,016   $19,831    $32,448   $32,133    $16,280   $15,398
                      
Number of home sales closed       240        162       114        185       182         98       107

Gross profit                    5,835      3,340     1,712      3,004     3,180      1,176       603

Income (loss) before minority             
   interest and provision for   2,423        749    (1,442)        446      144     (5,254)   (1,941)
   income taxes

Net income (loss)               1,424        444      (873)        240       64     (3,109)   (1,171)
<FN>
     (1)Includes  the provision to reduce the carrying  value  of
     certain real estate inventories and other capitalized costs.
</FN>
</TABLE>
<PAGE>
<TABLE>
                      Sundance Homes, Inc.
                                
                           Schedule IX
                      Short-Term Borrowings
<CAPTION>

                                      Balance at     Weighted       Maximum       Average       Weighted
                                        End of       Average         Amount        Amount       Average
                                       Year (1)    Interest Rate  Outstanding    Outstanding   Interest Rate
Category of Aggregate Short-Term                       (2)        During the       During the   During the
Borrowings                                                          Year (3)       Year (4)      Year (5) 

<S>                                   <C>          <C>            <C>            <C>           <C>                         
YEAR ENDED September 30, 1996:        $19,225      9.38%          $36,262        $31,673       9.39%      
Real estate loans
                                                                
NINE MONTHS ENDED September 30, 1995  $35,523      9.83%          $36,994        $31,777       9.84%
Real estate loans
                                                                         
YEAR ENDED December 31, 1994          $23,973      8.54%          $34,413        $22,084       7.87%
Real estate loans
<FN>
_______________________________
(1)See Note 5 of the Notes to Consolidated Financial Statements.
(2)The weighted average interest rate is computed based upon  the
month-end  outstanding principal balance and applicable  interest
rate of  the revolving line of credit.
(3)The  maximum  amount outstanding during the year  is  computed
using month-end outstanding principal balances.
(4)The  average  amount outstanding during the year  is  computed
based upon the month-end outstanding principal balances.
(5)The weighted average interest rate during the year is computed
based upon actual interest incurred and the average amount of the
revolving line of credit outstanding during the year.
</FN>
</TABLE>