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, 1997
                                
                 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  22, 1997, 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
$1,784,297.    (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  22, 1997:  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 25, 1998,
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                                               11

     Item  3.  Legal Proceedings                                        11

     Item  4.  Submission of Matters to a Vote of  Security  Holders    12

PART II

    Item 5.    Market for Registrant's Common Equity and Related 
               Stockholder Matters                                      12

    Item 6.    Selected Consolidated Financial Data                     13

    Item 7.    Management's Discussion and Analysis of Financial
               Condition and Results of Operations                      14

    Item 8.    Financial Statements and Supplementary Data              18

    Item 9.    Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                      18

PART III

    Item 10.   Directors and Executive Officers of the Registrant       19

    Item 11.   Executive Compensation                                   19

    Item 12.   Security Ownership of Certain Beneficial Owners
               and Management                                           19

    Item 13.   Certain Relationships and Related Transactions           19

PART IV

    Item 14.   Exhibits, Financial Statement Schedules, and Reports
               on Form 8-K                                              20

SIGNATURES                                                              21

<PAGE>

                             PART I
Item 1.  Business

The Company

Sundance  Homes,  Inc. (the "Company") is  a  builder  of  single
family homes in the Chicago metropolitan area and condominiums in
the  Chicago urban market.  Prior to September 1996, the  Company
primarily  was  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 two condominium-loft conversion projects
in  Chicago.  In 1997 the Company increased its presence  in  the
Chicago  urban market with the addition of two more  condominium-
loft   conversion  projects;  a  mid-rise  condominium  apartment
project  and a 23-story high-rise condominium apartment  project.
In  addition, the Company is the mortgagee in possession of a  28
story  office  building conversion project in Chicago.   Also  in
1997,  the  Company expanded its custom home division,  Rembrandt
Homes, by acquiring the rights to 135 partially developed lots in
Vernon  Hills, Illinois, upon which the Company plans  to  market
and  build  custom homes in the $300,000 - 500,000  price  range.
The  Company strives to deliver superior value to both its entry-
level and 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 suburban 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,
southwest and west of Chicago.

The  Chicago  urban market, includes the Loop area,  South  Loop,
West Loop, New East Side, River North, Streeterville and the Gold
Coast.  Extensive development is taking place in other areas near
the traditional Loop boundaries.  These include the areas between
Roosevelt and Cermak, and Halsted west to the United Center,  and
as  far  north as 5800 along the Ravenswood corridor.  Management
believes that housing demand in this market is strong due to  the
high  rents in the markets, job growth in the downtown area,  the
long commute times to and from the city from the suburbs and  the
numerous  amenities  available in the Chicago  downtown  area  to
prospective home buyers.

The  Company  currently has 24 communities in various  stages  of
planning and development and an additional four properties  under
contract or option.  At September 30, 1997, the Company  had  247
homes  subject to pending sales contracts.  The Company currently
owns   or   controls  sufficient  land  and  buildings  for   the
development  of  approximately   2,320  housing  units   and   is
evaluating or negotiating for the purchase of additional land and
buildings,  most  of  which  is  unentitled,  for  the   possible
development of approximately 1,700 additional housing units.

The  Company  is currently operating  three divisions:   Sundance
Suburban   Properties;  Rembrandt  Homes;   and   Chicago   Urban
Properties.  The Sundance Suburban Division focuses on affordably
priced entry-level and first time move-up houses primarily in the
collar  counties  surrounding  Chicago.  The  Rembrandt  Division
focuses  on  the semi-custom and custom market primarily  in  the
north and northwest Chicago suburban counties.  The Chicago Urban
Properties   Division   focuses  primarily  on   loft-conversion,
townhome   and  new  construction  mid  and  high-rise  apartment
condominiums  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 broad marketing and promotional strategic decisions,
accounting, finance, and information systems.
<PAGE>
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.

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
Cook,  DuPage,  Kane,  Kendall, Lake and  McHenry  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 three quarters of 1997 were  2,075,  an
increase  of  49%  over  the first three quarters  of  1996.  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  and
urban  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  5,500
homes  and  has completed 23 projects in the Chicago metropolitan
area.   As  of September 30, 1997, the Company had not  completed
any projects in the Chicago urban market.  The following presents
information relating to the Company's completed projects  in  the
Chicago metropolitan area as of September 30, 1997.
<CAPTION>

                                                               Total Number        Average
    Project                        County     Year 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
Wildflower                         DuPage         1997            251              199,000
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, 1997.
<CAPTION>
                                                                 Estimated                               
                                                                 Homes at                           
                                              Initial Closing   Completion      Homes     Homes     Homes in         Sales
  Project              Location               (Fiscal Quarter)      (1)        Closed   Remaining   Backlog(2)   Price Ranges (3)
<S>                 <C>                       <C>               <C>           <C>      <C>         <C>         <C>   
Country Walk        Round Lake Beach,           3rd Qtr. 1992      780          755        25          4       $114,000-160,000
                    Lake County

Ravinia Woods       Gurnee,                     4th Qtr. 1993      373          371         2          0       $150,000-199,000
                    Lake County

Spring Lake Farm    Lake in the Hills,          1st Qtr. 1994      279          278         1          0       $111,990-205,990
South (4)           McHenry County

Heartland Meadow    Elgin/South Elgin,          4th Qtr. 1994      685          550       135         12       $ 94,990-168,990
                    Kane County

Bellchase           Lake in the Hills,          2nd Qtr. 1995      578          233       345         17       $117,990-182,990
                    McHenry County

Sutton on the Lake  Round Lake Beach,           4th Qtr. 1996      481          106       375         26       $113,990-160,000
                    Lake County

Cherry Hill         Schaumburg,                 3rd Qtr. 1997       29           21         8          4       $185,000-277,000
                    Cook County

McCarty's Mill      Aurora, Kane County         4th Qtr. 1997      111           11       100          8       $118,000-139,000

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

Hometown Square     Oswego, Kane County                             75            0        75          3       $136,990-163,990

Walnut Pointe(5)    Bolingbrook, Will County                       166            0       166          0       $120,000-150,000

Cedar Creek         Matteson, Cook County                          146            0       146          0       $120,000-160,000

Properties Under    Sundance Suburban                            1,670            0     1,670          0
Contract (6)

Conservancy         Gurnee, Lake County         2nd Qtr. 1995      131           88        43          3       $226,990-254,990

Deloraine           Palatine, Cook County       3rd Qtr 1996        23           22         1          1       $310,000-342,000

Gregg's Landing     Vernon Hills, Lake County                      135            0       135         12       $359,000-431,000

Lakeside Estates    Palatine, Cook County                            2            0         2          0       $385,000-475,000

St. Paul Lofts      Chicago, Cook County        3rd Qtr. 1997       85           73        12          9       $ 84,900-264,600

Erie Center Lofts   Chicago, Cook County        4th Qtr. 1997      109           22        87         71       $ 92,900-399,900

Michigan Ave Lofts  Chicago, Cook County                            60            0        60         42       $140,535-198,650

Erie Tower          Chicago, Cook County                           128            0       128         29       $134,000-489,000

Sangamon Lofts (5)  Chicago, Cook County                            48            0        48          0       $ 89,000-246,000

Marathon Terrace(5) Chicago, Cook County                           132            0       132          0       $137,000-305,000

201 N. Wells (5)    Chicago, Cook County                           165            0       165          0       $ 65,000-330,000

625 W. Jackson (5)  Chicago, Cook County                            90            0        90          0       $102,000-302,000

Properties Under    Chicago, Cook County                            60            0        60          0
Contract (6)


                                               Total:            6,588        2,530     4,058        247

<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, 1997,  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 has preliminarily agreed to final terms on
  these locations and intends to acquire the property in fiscal 1998.
  The Company  is scheduled to open for sale in these communities
  during  fiscal 1998.
(6)          The Company 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 is  developing  two  different
products in the downtown Chicago market. For the majority of  the
Company's  urban development, the Company targets for acquisition
former or current manufacturing buildings which are suitable  for
the  conversion to residential loft-condominiums or  construction
of  townhomes.   The  Company is also targeting  for  acquisition
parcels for use in developing multi-story apartment condominiums.
Typically,  any building on a parcel of this type would  be  torn
down  prior  to new construction beginning.  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.
<PAGE>

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 shorter than for suburban developments.

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 new trends in the industry, while carefully tracking the
design  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  suburban project  by  coordinating  the
exterior colors and trim of neighboring homes.  The product lines
offered  in  both  suburban and urban projects 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 unit in the project.

Construction

The  Company  typically 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
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.
<PAGE>

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  home-building  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.

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 suburban 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.
In  the Chicago urban market, the completion time of each project
typically  ranges  from nine months to eighteen months  depending
upon the size and number of apartment or loft units per project.

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,  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  has  an  exclusive relationship with  an  award  winning
interior designer who is responsible for creating and maintaining
attractive model homes 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.
<PAGE>

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 typically peak  in  the
July  through  September  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 11. Quarterly  Results  of
Operations   in   the   Footnotes   to   Consolidated   Financial
Statements).

Backlog

The Company's homes are generally offered for sale in advance  of
their  construction.   Substantially all of  the  Company's  home
sales  during 1997 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
twelve month periods presented:
<CAPTION>
                                                          September 30,
                                                 1997         1996         1995
                                                      (dollars in thousands)
<S>                                             <C>          <C>          <C>
   Number of home sales closed during the            636          701          631
   twelve month period
   
   Lots/units owned an available for               1,920        1,717        3,113
   development

   Number of lots/units under contract             2,331        3,032          824

   Backlog                                           247          197          274

   Average sales price in backlog                   $183         $168         $183
  
   Aggregate sales value in backlog              $45,228      $33,193      $50,232
</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 most of the sales of homes in backlog as of September
30,  1997 will occur in fiscal 1998.  However, no assurances  can
be  given  that homes in backlog will result in actual  closings.
The  aggregate sales value of backlog increased approximately $12
million  from  September  30, 1996  to  September  30,  1997  due
primarily  to  the  Company's entrance  into  the  Chicago  urban
market.    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.
<PAGE>

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,  1997, there can be no assurance  that  affordable
mortgage   financing  will  remain  available  to  the  Company's
customers in the future.

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,  1997,  the FHA financing limit  for  a  one  unit
residence was $153,000.

Competition and Market Factors

The home-building 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 home-building industry.

The  Chicago  urban market is less fragmented then  the  suburban
market.   While there are fewer competitors active in the market,
the  number  is  quickly growing.  Management believes  that  the
Company  competes favorably with the competition as a  result  of
its  early entry into the market, development expertise,  product
design, location and the size and scope of its operations.

The  home-building 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 home-building 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.
<PAGE>
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.

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,
1997,  there  were approximately $9.6 million in  performance  or
maintenance  bonds and approximately $9.2 million in  letters  of
credit outstanding for such purposes (see Management's Discussion
and  Analysis  of Financial Condition and Results of  Operations-
Liquidity and Capital Resources).

Employees

As of September 30, 1997, the Company employed 140 persons, 56 of
whom  were  involved  in  project management,  land  development,
production,  contract management and contract administration,  38
of  whom were sales and marketing personnel, and 46 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 terminates on March 31, 1998.  The Company is currently
arranging  to  relocate its corporate office effective  April  1,
1998.

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.
<PAGE>
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

There  were  no  matters submitted to a vote of security  holders
during the Company's fiscal quarter ended September 30, 1997.

                             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.
<TABLE>
The following table shows the high and low closing prices for the
Common  Stock  for  the  periods indicated  as  reported  by  the
National Market:
<CAPTION>
                                             HIGH       LOW
   <S>                                     <C>       <C>
    Fiscal 1997                           
     Quarter ended September 30, 1997       $2.010    $1.500
     Quarter ended June 30, 1997             2.375     1.750
     Quarter ended March 31, 1997            3.125     2.250
     Quarter ended December 31, 1996         4.000     2.250

     Fiscal 1996
     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
</TABLE>


The  closing  price of the Company's Common Stock as reported  on
the National Market on December 22, 1997 was $1.5625 per share.
As  of December 18, 1997, there were 43 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 years ended September 30, 1997 and
1996,  the  nine months ended September 30, 1995  and  the  years
ended  December  31, 1994, and 1993 have been  derived  from  the
Company's     audited    consolidated    financial    statements.
Consolidated  balance sheets at September 30, 1997 and  September
30,  1996  and  the  related consolidated statements  of  income,
changes  in  shareholders' equity, and cash flows for  the  years
ended  September  30,  1997 and 1996 and the  nine  months  ended
September  30,  1995 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>
                                                                                           Nine
   Statement of Income Data:                     Year ended      Year ended      Months ended        Year ended      Year ended
                                                September 30,   September 30,   September 30,      December 31,     December 31,
                                                    1997           1996             1995                1994            1993      
                                                                    (in thousands, except per share amounts)
<S>                                            <C>             <C>              <C>                <C>              <C>        
   Residential Sales (1)                         $108,743       $120,948         $63,811           $118,659          $77,764  

   Income (loss) before minority interest and        (715)         2,176          (7,051)             3,643            8,035
   and provision for income taxes (2)

   Net income (loss)                                 (350)         1,235          (4,216)             1,930            5,090
 
   Net income (loss) per share                     ($0.04)         $0.16          ($0.54)             $0.25         
 
   Pro Forma Statement of Income Data: (3)

   Net income                                                                                                         $4,709

   Net income per share                                                                                                 0.76

   Balance Sheet Data:                        September 30,     September 30,   September 30,      December 31,     December 31,
                                                  1997              1996            1995               1994             1993
                                                                                (in thousands)
   Real estate inventories                       $80,787         $76,101         $86,434             $86,721           $65,370
   
   Total assets                                   94,548          86,406          98,880              98,907            81,057
   
   Notes and mortgages payable                    33,087          23,027          42,787              34,280            26,873
 
   Minority interest (2)                            (182)            111             266               1,049               (64)
   
   Shareholders' equity                           28,043          28,393          27,153              31,369            29,439
  
<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 adjusted  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 years ended September  30,  1997  and
1996 and the unaudited year ended September 30, 1995.

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>
                                                     Year ended September 30,
                                                 1997          1996          1995
<S>                                             <C>           <C>           <C>
  Residential sales                                 100.0%        100.0%        100.0%
  Cost of sales                                      89.0          88.5          91.6
  Reduction in carrying value of real estate          -             -             3.4  
  assets
  Gross profit                                       11.0          11.5           5.0
  Selling expenses                                    7.9           5.8           6.3
  General and administrative expenses                 4.0           4.1           4.7
  Other (income) expense, net                        (0.2)         (0.2)          0.2
  Income (loss) before minority interest and         (0.7)          1.8          (6.2)
  provision for income taxes
  Minority interest                                  (0.1)          0.1             -
  Provision (benefit) for income taxes               (0.2)          0.7          (2.5)
  Net income (loss)                                  (0.4%)         1.0%         (3.7%)
  New orders (net)                                    686           624           326
  Homes closed-units                                  636           701           631
  Average selling price-homes closed             $171,000      $172,500      $169,800
</TABLE>
<PAGE>

Year  Ended  September  30,  1997  Compared  to  the  Year  Ended
September 30, 1996

Residential  sales,  which are recognized upon  the  selling  and
closing  of homes, decreased $12.2 million to $108.7 million  for
the  year ended September 30, 1997, a decrease of 10.1% over  the
twelve  months  ended  September  30,  1996.  The  decrease   was
primarily  due  to  an  overall decline in the  suburban  housing
market  of  approximately 10%.  The average sales price  of  home
sales  closed decreased slightly from $172,500 in fiscal 1996  to
$171,000 in fiscal 1997.

There  were 686 net new sales orders for the year ended September
30,  1997 representing an increase of 10%, or 62 orders, over the
fiscal  1996  total of 624. The Company attributes  the  increase
primarily  to  the expansion of its market place to  include  the
Chicago urban market.

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 decreased $10.3 million to  $96.8
million  in  fiscal  1997 primarily as a result  of  lower  sales
volume.   Cost  of sales as a percent of revenues  was  89.0%  in
fiscal 1997 compared to 88.5% of sales revenue in fiscal 1996.

   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 $1.6 million from $7.0 million  in
fiscal  1996  to $8.6 million in fiscal 1997.  As  a  percent  of
sales,  selling expenses increased from 5.8% in the twelve months
ended  September  30,  1996, to 7.9% in the twelve  months  ended
September 30, 1997.   This increase is primarily due to increased
marketing activities for several projects which will not  deliver
closed  units  and  homes until fiscal 1998 and additional  costs
incurred  due  to the decision by the Company to use commissioned
brokers.

General and administrative expenses decreased by $639,000 in  the
year  ended  September  30,  1997  compared  to  the  year  ended
September  30,  1996.   As a percent of  sales,   these  expenses
remained substantially unchanged.  These costs have decreased due
to the Company's continued efforts to reduce such expenses.

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 losses for 1997 was $131,000.  Pursuant to the
provisions   of   the  partnership  agreement,  limited   partner
distributions of $161,000 were paid during 1997.

  The benefit for income taxes was $234,000 in fiscal 1997.   The
Company  recognized  an  income tax  provision  of  approximately
$824,000 for fiscal 1996.  The effective tax rate for both fiscal
1997 and 1996 was approximately 40%.
<PAGE>

Year Ended September 30, 1996 Compared to the Twelve Months Ended
September 30, 1995

Residential  sales 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 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 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>

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 1997  or  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.


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  used  for operations in fiscal 1997 was $7.9  million,
primarily due to the build-up of inventory and deferred  start-up
costs  on  projects  for which there were no closings  in  fiscal
1997.

On  February  7,  1997 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 $60.0 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 $40 million, and prime plus .5% for borrowings in
excess  of  $40 million, plus certain customary fees.   The  Loan
Agreement  is scheduled to mature on February 1, 1999.  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.  As of  September  30,
1997, the Company had violated certain covenants as set forth  in
the  Loan  Agreement, including those related  to  the  Company's
corporate  reorganization, projects exceeding three stories,  and
certain financial covenants, specifically, those related  to  net
worth and net income.  The Company believes that it will be  able
to either cure these defaults and events of default or revise the
terms  of the Loan Agreement or negotiate a replacement facility,
but there can be no assurance of such cure, revised agreement  or
replacement  facility.   Failure by the  Company  to  cure  these
defaults,  revise the terms of the Loan Agreement or negotiate  a
replacement  facility  on a timely basis could  have  a  material
adverse  effect  on the Company's operations.   The  subordinated
notes  payable  to  the Principal Shareholder,  as  well  as  any
interest thereto, are not allowed to be repaid until all defaults
are  cured  and certain minimum net worth levels are  maintained.
As  of  December 15, 1997, the Company was negotiating  with  its
banks  in order to provide adequate funding for the expansion  of
its  Chicago Urban Division including the construction of  a  23-
story  high rise which would include 6 floors of parking  and  17
floors  of residential condominium apartments.  There can  be  no
assurances that the Company will be able to secure such financing
on acceptable terms.

As  of September 30, 1997, the Company had borrowed $30.8 million
under  the  Loan  Agreement and had $9.2 million  of  outstanding
letters of credit, leaving $20.0 million as available for  future
borrowings.   The Company believes that the current facility  (as
revised  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.
<PAGE>

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, 1998.

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, 1998.

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, 1998.

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, 1998.

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, 1998.
<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 a       Amended and Restated Articles of Incorporation of the Registrant
3.2 a       Amended and Restated Bylaws of the Registrant
4.1 c       Specimen stock certificate representing Common Stock
4.2 f       Second Amended and Restated Revolving Credit Loan Agreement dated
            February 7, 1997
4.3         First Amendment to Second Amended and Restated Revolving Credit
            Loan Agreement dated April 11, 1997
10.1 b      The Sundance Homes, Inc. 1993 Stock Incentive Plan
10.2 b      The Sundance Homes, Inc. 1993 Directors' Option Plan
10.3 b      Profit Sharing and Savings Plan
10.4 b      Form of Tax Indemnification Agreement
10.5 b      Form of Director's Indemnification Agreement
10.6 b      Form of Dividend Note
10.8 c      Lease Agreement between the Company and The Mutual Life Insurance
            Company of New York
10.10 e     Employment Letter for Jon Tilkemeier, dated September 10, 1996
10.11 e     Employment Letter for Joseph Atkin, dated November 27, 1996
10.12 d     First Amendment to the Sundance Homes, Inc. Stock Incentive Plan
10.13 d     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

            a     Incorporated  by  reference  to  the  Company's
            Registration Statement on Form S-8, Registration  No.
            33-96546.
            b     Incorporated  by reference  to   the  Company's
            Registration  Statement  on  Form  S-1,  Registration
            Statement No. 33-60988.
            c     Incorporated  by  reference  to  the  Company's
            Annual  Report  on  Form 10-K for  the  period  ended
            December 31, 1994.
            d     Incorporated  by  reference  to  the  Company's
            Registration Statement on Form S-8, Registration  No.
            333-11087
            e     Incorporated  by  reference  to  the  Company's
            Annual Report on Form 10-K for the period ended
                 September 30, 1996.
            f     Incorporated  by  reference  to  the  Company's
            Quarterly  Report on Form 10-Q for the  period  ended
            December 31, 1996.

(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, 1997.

            SUNDANCE HOMES, INC.

    By:      /s/   Maurice Sanderman
       Maurice Sanderman, Chariman of the Board and Chief Executive Officer


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.
<TABLE>
   Signature                         Title                                Date
<S>                              <C>                                   <C>                                              
                                  Chairman of the Board and Chief       December 23, 1997
/s/ Maurice Sanderman                   Executive Officer
  Maurice Sanderman                  (Principal Executive Officer)
                                              
                                       Vice-President and Chief         December 23, 1997
/s/ Joseph Atkin                          Financial Officer
  Joseph Atkin                         (Principal Financial and
                                         Accounting Officer)
                                              
                                              
/s/ Dennis Bookshester                        Director                  December 23, 1997
  Dennis Bookshester                                              
                                              
                                              
/s/ Charles Engles                            Director                  December 23, 1997
  Charles Engles                                
                                              
                                              
/s/ Gerald Ginsburg                           Director                  December 23, 1997
  Gerald Ginsburg                               
</TABLE>                                              
<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, 1997 and
September 30, 1996                                                      F-3

Consolidated Statements of Income for the Year Ended September 30,
1997, the Year Ended September 30, 1996 and the Nine Months
Ended September 30, 1995                                                F-4

Consolidated Statements of Changes in Shareholders' Equity for 
the Year Ended September 30, 1997, the Year Ended September 30,
1996 and the Nine Months Ended September 30, 1995                       F-5

Consolidated Statements of Cash Flows for the Year Ended 
September 30, 1997, the Year Ended September 30, 1996 and the
Nine Months Ended September 30, 1995                                    F-6

Notes to Consolidated Financial Statements                              F-7

<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, 1997 and 1996, and the  results  of
their  operations  and  their cash  flows  for  the  years  ended
September  30, 1997 and 1996 and the nine months ended  September
30,  1995,  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 15, 1997
<PAGE>

<TABLE>
        SUNDANCE HOMES, INC.
     CONSOLIDATED BALANCE SHEETS
  (in thousands, except share data)
<CAPTION>                                                         
                                                    September 30,   September 30,
                                                        1997            1996
<S>                                                 <C>             <C> 
ASSETS                                                           
                                                                 
Cash and cash equivalents                            $  4,615        $   4,501
Real estate inventories                                80,787           76,101
Prepaid expenses and other assets                       1,566              751
Deferred income taxes receivable                            -              461
Property and equipment, net                             3,289            2,520
Deferred project start-up costs                         3,726            2,072
Income tax receivable                                     565                -
                                                                 
   TOTAL ASSETS                                      $ 94,548         $ 86,406
                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY                             
                                                                 
Accounts payable and accrued construction costs      $ 23,711         $ 23,067
Other accrued expenses                                  1,976            6,182
Customer deposits                                       2,116            1,433
Notes and mortgages payable                            33,087           23,027
Deferred income taxes payable                           1,604                -
Subordinated notes payable                              4,193            4,193
                                                                  
   Total liabilities                                   66,687           57,902
                                                                 
Minority interest                                        (182)             111
                                                                 
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                      78               78 
  Additional paid-in capital                           26,977           26,977
  Retained earnings                                       988            1,338
                                                                 
   Total shareholders' equity                          28,043           28,393
                                                                 
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $ 94,548         $ 86,406
<FN>
The accompanying notes are an integral part of these financila statements.
</FN>
</TABLE>
<PAGE>                                 

<TABLE>                                
                       SUNDANCE HOMES, INC.
                CONSOLIDATED STATEMENTS OF INCOME
              (in thousands, except per share data)
<CAPTION>                                 
                                                             
                                                                                Nine months
                                            Year ended        Year ended          ended
                                           September 30,     September 30,     September 30,
                                               1997              1996              1995
<S>                                       <C>               <C>               <C>   
Residential sales                          $ 108,743         $ 120,948         $  63,811
Cost of sales                                 96,793           107,057            58,852
Reduction in carrying value of real
 estate assets                                    -                 -              3,657
                                                                  
Gross profit                                  11,950            13,891             1,302
                                                                  
Selling expenses                               8,629             6,968             4,915
General and administrative expenses            4,301             4,940             3,370
Other (income) expense, net                     (265)             (193)               68
                                                                  
Income (loss) before minority interest
 and provision (benefit) for income taxes       (715)            2,176            (7,051)
Minority interest                               (131)              117               (24)
                                                                  
Income (loss) before provision (benefit)
 for income taxes                               (584)            2,059            (7,027)
Provision (benefit) for income taxes            (234)              824            (2,811)
                                                                  
Net income (loss)                            $  (350)          $ 1,235           $(4,216)
                                                                  
Net income (loss) per share                   ($0.04)            $0.16            ($0.54)
                                                                  
Weighted average number                                           
 of shares outstanding                         7,807             7,806             7,805

<FN>
The accompanying notes are an integral part of these financial statments.
</FN>
</TABLE>
<PAGE>
<TABLE>                                                                  
                      SUNDANCE HOMES, INC.
   CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                         (in thousands)
<CAPTION>                                
                                
                                
                                     Common Stock       Additional
                                                         Paid-In     Retained     
                                   Shares     Amount     Capital     Earnings       Total
                                                              
<S>                                <C>        <C>       <C>          <C>           <C>   
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
                                                              
     Net loss                           -         -            -         (350)         (350)
                                                              
Balance at September 30, 1997       7,807     $  78     $ 26,977       $  988      $ 28,043

<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>                                                              
                                                              
<TABLE>                                
                        SUNDANCE HOMES, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (in thousands)
<CAPTION>                                  
                                                                                                        Nine months
                                                                Year ended            Year ended           ended
                                                               September 30,        September 30,       September 30,
                                                                   1997                  1996              1995
<S>                                                            <C>                 <C>                 <C>
Operating activities:                                                
   Net income (loss)                                            $   (350)           $   1,235           $  (4,216)
   Adjustments to reconcile net income (loss) to net cash
      provided by (used for) operating activities:
        Depreciation and amortization                              1,109                  848                 569
        Reduction in carrying value of real estate assets              -                    -               3,657
        Minority interest                                           (131)                 117                 (24)
        Deferred income taxes                                      2,065                 (461)             (1,023)
        Changes in operating assets and liabilities:
           Real estate inventories                                (4,686)              10,333              (2,878)
           Prepaid expenses and other assets                        (815)                 278                (148)
           Income tax receivable                                    (565)               1,964              (1,964)
           Deferred project start up costs                        (1,654)                 628                 626
           Accounts payable and accrued construction cos ts          644                6,551              (3,737) 
           Other accrued expenses                                 (4,206)                 866               1,333
           Customer deposits                                         683               (1,216)               (108)
                                                                     
Net cash (used for) provided by operating activities              (7,906)              21,143              (7,913)
                                                                     
Investing activities:                                                
   Property and equipment, net                                    (1,878)              (1,292)               (244)
   Exercise of stock options                                           -                   (5)                  -
                                                                     
Net cash used for investing activities                            (1,878)              (1,297)               (244)
                                                                     
Financing activities:                                                
   Borrowings under line of credit                               111,275               99,392              69,750
   Repayments of line of credit                                  (99,682)            (115,691)            (58,199)
   Borrowings under notes payable                                    650                1,340                 535
   Repayments of notes payable                                    (2,183)              (4,801)             (3,579)
   Contributions from minority interest                                -                   73                 111
   Distributions to minority interest                               (162)                (345)               (870)
                                                                     
Net cash provided by (used for) financing activities               9,898              (20,032)              7,748
                                                                     
Net increase (decrease) in cash and cash equivalents                 114                 (186)               (409)  

Cash and cash equivalents:                                           
   Beginning of period                                             4,501                4,687               5,096
                                                                                                                      
   End of period                                                $  4,615             $  4,501            $  4,687

<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
                                                                
                      SUNDANCE HOMES, INC.
                                
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
                       SEPTEMBER 30, 1997
                                
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 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.
<PAGE>
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.

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  straight   line   and
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 $2.9 million, $1.9 million and
$1.1  million during the years ended September 30, 1997 and  1996
and the nine months ended September 30, 1995,  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.
<PAGE>
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        Year ended       Nine months ended
                          September 30,     September 30,       September 30,
                              1997              1996                1995
<S>                      <C>               <C>               <C>
   Cash paid for:                               
        Interest          $  5,975          $  3,536          $  3,096
        Income taxes            75                 -               150
</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.

Note 2 - Real Estate Inventories:
<TABLE>
Real estate inventories are summarized as follows (in thousands):
<CAPTION>
                                         September 30,    September 30,
                                            1997             1996
<S>                                     <C>              <C>
     Work-in-process:                      
          Land and land development       $ 38,337         $ 49,382
          Construction inventory            33,948           18,761
     Completed homes:                               
          Models                             7,590            6,493
          Speculative homes                    912            1,465
                                          $ 80,787         $ 76,101
</TABLE>

Completed  homes  include models constructed  to  help  market  a
development  and  allocations of land and development  and  other
allocable costs. Speculative homes represent non-model homes which 
are substantially complete and are not subject to a sales contract.
<PAGE>
<TABLE>
Capitalized  interest is included in real estate  inventories  as
follows (in thousands):
<CAPTION>
                                                   Year Ended               Year Ended            Nine Months Ended
                                                September 30, 1997       September 30, 1996       September 30, 1995
<S>                                            <C>                      <C>                      <C>    
Interest capitalized, beginning of period          $ 5,427                  $ 5,418                  $ 3,255
Interest incurred and capitalized                    4,534                    3,581                    3,839
Interest amortized to cost of sales                 (3,314)                  (3,572)                  (1,676)
Interest capitalized, end of period                $ 6,647                  $ 5,427                  $ 5,418
</TABLE>

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 as a charge against  earnings  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 3 - Property and Equipment:
<TABLE>
Property and equipment are summarized as follows (in thousands):
<CAPTION>
                                                September 30,       September 30,
                                                     1997                1996
<S>                                            <C>                 <C>
     Model home upgrades and furnishings          $ 4,307             $ 2,941
     Equipment and furniture                        3,147               2,740
     Vehicles                                         379                 402
     Leasehold improvements                            52                  41
                                                    7,885               6,124
     Accumulated depreciation                       4,596               3,604
                                                  $ 3,289             $ 2,520
</TABLE>
<PAGE>
Note 4 - Notes and Mortgages Payable:
<TABLE>
Notes  and  mortgages  payable  are  summarized  as  follows  (in
thousands):
<CAPTION>
                                             September 30,     September 30,
                                                 1997              1996
<S>                                         <C>               <C>
     Revolving line of credit                  $ 30,818          $ 19,225
     Notes payable to land sellers                2,269             3,802
                                                $33,087          $ 23,027
</TABLE>
On  February  7,  1997 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 $60.0 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 $40 million, and prime plus .5% for borrowings in
excess  of  $40 million, plus certain customary fees.   The  Loan
Agreement  is scheduled to mature on February 1, 1999.  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.  As of  September  30,
1997, the Company had violated certain covenants as set forth  in
the  Loan  Agreement, including those related  to  the  Company's
corporate  reorganization, projects exceeding three stories,  and
certain financial covenants, specifically, those related  to  net
worth and net income.  The Company believes that it will be  able
to either cure these defaults and events of default or revise the
terms  of the Loan Agreement or negotiate a replacement facility,
but there can be no assurance of such cure, revised agreement  or
replacement  facility.   Failure by the  Company  to  cure  these
defaults,  revise the terms of the Loan Agreement or negotiate  a
replacement  facility  on a timely basis could  have  a  material
adverse  effect  on the Company's operations.   The  subordinated
notes  payable  to  the Principal Shareholder,  as  well  as  any
interest thereto, are not allowed to be repaid until all defaults
are  cured  and certain minimum net worth levels are  maintained.
As  of  December 15, 1997, the Company was negotiating  with  its
banks  in order to provide adequate funding for the expansion  of
its  Chicago Urban Division including the construction of  a  23-
story  high rise which would include 6 floors of parking  and  17
floors  of residential condominium apartments.  There can  be  no
assurances that the Company will be able to secure such financing
on acceptable terms.

As  of September 30, 1997, the Company had borrowed $30.8 million
under  the  Loan  Agreement and had $9.2 million  of  outstanding
letters of credit, leaving $20.0 million as available for  future
borrowings.   The Company believes that the current facility  (as
revised  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.
<PAGE>
<TABLE>
Maturities  of notes and mortgages payable in future periods  are
as follows (in thousands):
<CAPTION>
                                          Year ending
                                         September 30,
<S>                                     <C>
               1998...................       1,114
               1999...................      31,226
               2000...................         408
               2001...................         339
                                           $33,087
</TABLE>
Interest  and related debt issuance costs incurred, all of  which
were  capitalized, during the year ended September 30, 1997,  the
year ended September 30, 1996 and the nine months ended September
30, 1995, aggregated approximately $4.5 million, $3.5 million and
$3.8 million, respectively.

Note  5  - Subordinated Notes Payable

Prior  to the Company completing the public offering on  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  the
remaining $4.2 million was paid in the form of promissory  notes,
which  are  subordinate to the Company's bank indebtedness,  bear
interest at 7.5% which compounds daily and originally matured  in
two   equal   annual  installments  on  the  first   and   second
anniversaries  of  the  offering.  On  September  30,  1997,  the
maturity  date of the notes was extended to September  30,  1998.
Payment   of  the  annual  installments  is  subject  to  certain
restrictions under the Company's Revolving Credit Loan  Agreement
(see Note 4 - Notes and Mortgages Payable).


Note 6 - Income Taxes:
<TABLE>
The  provision  (benefit) for income taxes  was  as  follows  (in
thousands):
<CAPTION>
                            Year Ended                Year Ended            Nine Months Ended
                        September 30, 1997        September 30, 1996        September 30, 1995
<S>                    <C>                       <C>                       <C>
     Current                                     
       Federal                    -                     $105                     ($1,521)
       State                      -                       35                        (267)
                                  -                      140                      (1,788) 
     Deferred                                                 
       Federal                 (199)                     563                        (869)
       State                    (35)                     121                        (154)
                               (234)                     684                      (1,023)
     Total                    ($234)                    $824                     ($2,811)
</TABLE>
<PAGE>
<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              Year Ended               Nine Months Ended
                                      September 30, 1997       September 30, 1996          September 30, 1995
<S>                                  <C>                      <C>                         <C>  
     Income taxes at the Federal             (206)                    $700                      ($2,390)
         statutory rate
     State income taxes, net of               (23)                     150                         (279)
         Federal benefit
     Other                                     (5)                     (26)                        (142)
          Total                             ($234)                    $824                      ($2,811)
</TABLE>
<TABLE>
The  consolidated balance sheets included the following  deferred
tax (assets) or deferred tax liabilities:
<CAPTION>
                                               September 30,     September 30,    September 30,
                                                  1997              1996             1995
<S>                                           <C>               <C>              <C>      
     Deferred project start-up costs               1,538             $843             $1,017
     Real estate inventories                       1,723           (1,378)            (1,008)
     Partnership book to tax differences               -              176                268
     Accrued expenses                               (274)            (266)              (159)
     Depreciation of property and equipment          117              164                 61
     Tax carryforward items                       (1,500)               -                  -
     Other                                             -                -                 22
                                                  $1,604            ($461)              $201
</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>
<TABLE>
A reconciliation of the minority interest balance as presented in
the Consolidated Balance Sheets is as follows (in thousands):
<CAPTION>
<S>                                                                    <C>
      Minority interest in net assets at December 31, 1994             $1,049
      Contributions                                                       111
      Limited partner's interest in 1995 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
      Contributions                                                         -
      Limited partner's interest in 1997 net loss of the partnership     (131)
      Distributions during 1997                                          (162)
      Minority interest in net assets at September 30, 1997             ($182)
</TABLE>

Note 8 - 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.

As  of  September  30,  1997, options  for   92,625  shares  were
exercisable.
<PAGE>
<TABLE>
A summary of changes in stock options outstanding is as follows:
<CAPTION>
                                        Options      Option price
                                                      (per share)
<S>                                    <C>          <C>
     Opening Balance                     43,500        $7.25-11.25

     1995                                      
     Granted                            208,500        $2.375-3.25
     Terminated                        (145,500)       $2.375-3.25
     Balance of 1995 Issued Shares       63,000        $2.375-3.25

     1996                                      
     Granted                            111,500        $1.625-3.625
     Terminated                         (22,500)          $1.625
     Balance of 1996 Issued Shares       89,000        $1.625-3.625

     1997                                      
     Granted                            172,500        $2.25-3.0625
     Terminated                         (37,500)       $2.625-3.0625
     Balance of 1997 Issued Shares      135,000        $2.25-3.0625

     Total Outstanding Granted Shares   330,500        $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.
<TABLE>
A summary of changes in stock options granted is as follows :
<CAPTION>
                                             Options        Option price
                                             Granted         (per share)
<S>                                         <C>            <C>
     Opening Balance                          20,000         $7.25-10.00
     1995                                     20,000         $2.625-3.375
     1996                                     15,000            $2.00
     1997                                     15,000            $2.625
     Total Outstanding Granted Shares         70,000         $2.00-10.00
</TABLE>
      As  of  September 30, 1997, options for 55,000 shares  were
exercisable.
<PAGE>
Note 9 - 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 years ended
September  30,  1997and 1996 and the nine months ended  September
30, 1995.

Note 10 - 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,  1997, there were approximately  $9.6  million  in
performance  or maintenance bonds and approximately $9.2  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  $436,000,
$380,000  and $506,000 during the years ended September 30,  1997
and   1996  and  the  nine  months  ended  September  30,   1995,
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.
<PAGE>
Note 11 - Quarterly Results Of Operation (unaudited):
<TABLE>
The  following table reflects the results of operations  for  the
Company  during  the four quarters of 1997 and 1996  (dollars  in
thousands):
<CAPTION>
                               Sept. 30,   June 30,   Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31,   Dec. 31,
                                 1997        1997      1997        1996       1996        1996       1996        1995
<S>                           <C>         <C>        <C>        <C>        <C>         <C>        <C>        <C>        
Residential Sales               $47,161     $23,739    $15,131    $22,712    $40,653     $28,016    $19,831    $32,448
Number of home
   sales closed                     274         140         91        131        240         162        114        185
Gross profit                      6,832       2,736        632      1,750      5,835       3,340      1,712      3,004
Income (loss) before                               
   minority interest and
   provision for income
   taxes                          2,859          33     (2,664)      (943)     2,423         749     (1,442)       446
Net income (loss)                 1,807          22     (1,604)      (575)     1,424         444       (873)       240
</TABLE>