FORM 10 - Q

                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549
     
     (Mark One)

     [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the Quarterly Period Ended March 31, 1997

                                          OR

     [  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934


               For the transition period from           to            

                            Commission File Number 0-20829

                             DIAMOND HOME SERVICES, INC.
                (Exact name of registrant as specified in its charter)

              DELAWARE                               36-3886872
     (State or other jurisdiction of              (I.R.S. Employer 
     incorporation or organization)               Identification No.)

                     222 Church Street, Woodstock, Illinois 60098
             (Address of principal executive offices, including zip code)

                                    (815) 334-1414
                 (Registrant's telephone number, including area code)
                  -------------------------------------------------

     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 (  )

     The number of shares of the registrant's common stock outstanding as of
     May 1, 1997, the latest practicable date, was 9,079,675 shares.



                            PART I. FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS
     <TABLE>
                     DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                     (Unaudited)
     <CAPTION>
                                                  Three Months Ended
                                                       March 31,
                                                  ------------------
                                                   1997        1996
                                         (In thousands, except per share data)
     <S>                                         <C>         <C>
     Net Sales                                   $30,175     $27,093 
     Cost of sales                                16,812      15,293 
     Gross Profit                                 13,363      11,800 
     Operating expenses:
       Selling, general, and
         administrative expense                   13,186      10,932 
       Operating interest expense                                 22 
       Amortization expense                          143         132 
     Operating income                                 34         714 
     Interest income(expense), net                   220         (66)
     Income before income taxes                      254         648 
     Income tax provision                             99         299 
     Net Income                                     $155        $349 

     Net income per share                           $.02        $.06

     Weighted average number of common
     shares and equivalent outstanding             9,192       6,250 

     See accompanying notes.

     </TABLE>

     <TABLE>
                     DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                        CONDENSED CONSOLIDATED BALANCE SHEETS

     <CAPTION>
                                                    MARCH 31,     DECEMBER 31,
                                                       1997           1996
                                                   (Unaudited) 
                                                          (In thousands)
     <S>                                             <C>             <C>
             ASSETS
     Current assets:
       Cash and cash equivalents                     $13,551         $18,982
       Accounts receivable                             6,773           8,621
       Finance company accounts receivable             6,841           5,312
       Refundable income taxes                         1,753           1,725
       Prepaids and other current assets               1,437           1,377
       Deferred income taxes                             640             794

     Total current assets                             30,995          36,811
     Net property and equipment                        1,867           1,607
     Intangible assets, net                           16,934          16,961
     Deferred income taxes                             1,403           1,313
     Other                                             2,851           2,101
     Total assets                                    $54,050         $58,793


                     LIABILITIES AND COMMON STOCKHOLDERS' EQUITY

     Current liabilities:
       Accounts payable and accrued liabilities       $8,437         $13,767
       Due to stockholders                               554             554
     Total current liabilities                         8,991          14,321
     Long-term liabilities:
       Warranty and retention                          7,432           7,128
       Due to stockholders                             1,024           1,108
     Total long-term liabilities                       8,456           8,236
     Common stockholders' equity                      36,603          36,236
     Total liabilities and common stockholders'
       equity                                        $54,050         $58,793

     See accompanying notes.

     </TABLE>

     <TABLE>
                     DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (Unaudited)
     <CAPTION>
                                                             Three Months Ended
                                                                  March 31
                                                               (in thousands)
                                                              1997         1996
     <S>                                                    <C>        <C>
     Operating activities:
     Net income                                             $   155    $   349 
       Adjustments to reconcile net income to net cash
           provided by (used in) operating activities:
         Depreciation and amortization                          224        197 
         Deferred income taxes                                   64        (35)
         Changes in operating assets and liabilities:
           Accounts receivable and other assets               1,436     (3,172)
           Accounts payable and accrued expenses             (5,366)    (2,043)
           Warranty and retention                               340        354 
       Net cash used in operating activities                 (3,147)    (4,350)
     Investing activities:
       Consumer finance loans originated, net                (1,529)    (6,881)
       Capital expenditures                                    (341)      (120)
       Advances to "captive" insurance company and other       (542)       (23)
       Net cash used in investing activities                 (2,412)    (7,024)
     Financing activities:
       Payments on notes receivable from officers for
          treasury stock and other                              212            
       Borrowings (Repayment) on bank line of credit, net                7,706 
       Payments due to stockholders                             (84)    (1,001)
       Net cash provided by financing activities                128      6,705 
       Net decrease in cash and cash equivalents             (5,431)    (4,669)
       Cash and cash equivalents at beginning of period      18,982      4,715 
       Cash and cash equivalents at end of period           $13,551     $   46 

     Supplemental cash flow disclosure:
       Interest paid                                        $           $  378 
       Income taxes paid                                    $    52     $   94 

     See accompanying notes.

     </TABLE>


                     DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
                          (TABULAR AMOUNTS ARE IN THOUSANDS)

     1.   BASIS OF PRESENTATION

          The accompanying unaudited condensed consolidated financial statements
     have been prepared in accordance with generally accepted accounting
     principles for interim financial information and Article 10 of
     Regulation S-X.  Accordingly, they do not include all of the information
     and footnotes required by generally accepted accounting principles for
     complete financial statements.  In the opinion of management, all
     adjustments (consisting of normal recurring accruals) considered necessary
     for a fair presentation have been included.  Operating results for the
     three-month period ended March 31, 1997 are not necessarily indicative of
     the results that may be expected for the year ending December 31, 1997. 
     For further information, refer to the consolidated financial statements
     included in the Company's 1996 Annual Report on Form 10-K.

          The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the amounts reported in the financial statements
     and accompanying  notes.   Actual results could differ from these
     estimates.

     2.     CONSUMER FINANCING

            The following summarized condensed financial information for
     Marquise Financial, the Company's consumer finance subsidiary, is before
     eliminations of intercompany transactions in consolidation:

     <TABLE>
     <CAPTION>
                                                   March 31,    December 31,
                                                      1997          1996
                                                  (Unaudited)
     <S>                                            <C>            <C>
     Assets:
     Cash                                           $  282         $   50
     Financing receivables                           6,841          5,312
     Other assets                                      501            349
                                                    $7,624         $5,711


     Liabilities and Stockholder's Equity:
     Due to Diamond Exteriors, Inc.                 $7,622         $5,623
     Other                                              31             50
     Total liabilities                               7,653          5,673
     Total stockholder's equity (deficit)             (29)             38
     Total liabilities and stockholder's
       equity                                       $7,624         $5,711


     Results of operations for the three months ended March 31, 1997 and 1996,
     respectively:

     Financing income                                 $239            $39
     General and administrative expenses               349            177
     Loss before tax benefit                           110            138
     Income tax benefit                                 43             55
     Net loss                                          $67            $83

     Cash flow for the three months ended March 31, 1997 and 1996,
     respectively:

     Cash at beginning of period                    $   50         $   
     Net cash used in operating activities             (67)           (83)
     Net cash used in investing activities          (1,700)        (6,885)
     Net cash provided by financing activities       1,999          7,014
     Cash at end of period                            $282            $46

     </TABLE>

          At March 31, 1997, Marquise Financial had approximately $ 2.5 million
     in approved but not funded loan commitments.

     3.    EARNINGS PER SHARE

          At March 31, 1997 and 1996, the Company had 9,079,675 and 6,249,950
     common shares, respectively, issued and outstanding.  The increase in
     common shares relates to the Company s June 1996 initial public offering.

          In February 1997, the Financial Accounting Standards Board issued
     Statement No. 128, Earnings per Share, which establishes new standards for
     reporting and presenting earnings per share and, which is required to be
     adopted in the fourth quarter 1997; earlier adoption is not permitted.  At
     that time, the Company will be required to change the method currently used
     to compute earnings per share and to restate all prior periods.  Under the
     new requirements for calculating primary earnings per share, the dilutive
     effect of stock options will be excluded.  The application of Statement No.
     128 will not change the reported primary earnings per share for the first
     quarter ended March 31, 1997 and 1996.   Similarly, the impact of Statement
     No. 128 on the calculation of fully diluted earnings per share is expected
     to be negligible.


     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS

     RESULTS OF OPERATIONS

     FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996

     Net Sales

          Net sales increased $3.1 million, or 11.4%, from $27.1 million for the
     first quarter 1996 to $30.2 million for the first quarter 1997. 
     Approximately 47.5% of the increase in net sales was attributable to
     roofing and gutter products and services, net sales of which increased $1.5
     million to $20.2 million for the first quarter 1997.  Approximately 44.4%
     of the increase in net sales was attributable to garage door and entry door
     products and services, net sales of which increased $1.4 million to $5.5
     million for the first quarter 1997.  Approximately 2.6% of the increase in
     net sales was attributable to fencing and other products and services, net
     sales of which increased $82 thousand to $3.9 million for the first quarter
     of 1997.  The balance, 5.5% of the increase in net sales, was due to credit
     participation fee income of $350 thousand, primarily from Sears and its
     affiliates, on installed sales financed by Sears and its affiliates and
     other third-party finance companies, and interest income of $239 thousand
     on receivables financed by the Company's consumer finance subsidiary,
     Marquise Financial.  The first quarter increase in net sales was due
     primarily to:  (i) increased number of installations, (ii) increased
     average number of sales associates during the comparative periods from 655
     to 761; and (iii) increased finance income.  Backlog, defined as jobs sold
     but not installed, was $12.9 million and $13.0 million at March 31, 1997
     and March 31, 1996, respectively.

     Gross Profit

          Gross profit increased $1.6 million, or 13.2%, from $11.8 million, or
     43.5% of net sales, for the first quarter 1996 to $13.4 million, or 44.3%
     of net sales, for the first quarter 1997.  The increase in gross profit
     resulted from an increased number of installations, an increase in balance
     of sales to higher margin products and services and an increase in finance
     interest income.  The license fee incurred to Sears increased $424
     thousand, or 15.2%, from $2.8 million, or 10.5% of net installed sales, for
     the first quarter 1996 to $3.2 million, or 10.9% of net installed sales,
     for the first quarter 1997.  The increase in the license fee incurred to
     Sears for the first quarter 1997 was due to the increase in sales volume
     and balance of sales, primarily doors, to higher license fee products and
     services.  Sears and the Company entered into a three-year license
     agreement effective January 1, 1996.  Among other things, the license
     agreement provides for a fixed license fee, at the March 1995 license fee
     rate, to be charged during the term of the license agreement.  Gross profit
     before the Sears license fee, credit participation fee and finance interest
     income increased $1.8 million, or 12.8%, from $14.2 million, or 53.1% of
     net installed sales, for the first quarter 1996 to $16.0 million, or 54.0%
     of net installed sales, for the first quarter 1997.  The unit costs of
     materials, installation labor and warranty expense remained relatively
     constant during the quarterly period. 

     Selling, General and Administrative Expenses

          Selling, general and administrative expenses increased $2.3 million,
     or 20.6%, from $10.9 million in the first quarter 1996 to $13.2 million in
     the first quarter 1997 and, as a percentage of net sales, increased from
     40.3% to 43.7%.  The increase in selling, general and administrative
     expenses resulted primarily from expenses associated with increased sales
     volume, the increased number of sales associates and expenses related to
     the hiring of personnel to support the expansion of the infrastructure of
     the Company's core sales and installation business including the expansion
     of Marquise Financial.  Direct advertising expense increased $303 thousand,
     or 20.2%, from $1.5 million for the first quarter 1996 to $1.8 million for
     the first quarter 1997; as a percentage of net sales, direct advertising
     expense increased from 5.5% for the first quarter 1996 to 6.0% for the
     first quarter 1997, reflecting below plan lead generating effectiveness of
     ad placements during the quarter and, to a lesser extent, advertising price
     increases.  Selling commission expense, including attendant payroll-related
     benefits, increased $370 thousand, or 14.0%, from $2.6 million in the first
     quarter 1996 to $3.0 million in the first quarter 1997; as a percentage of
     net installed sales, selling commission expense increased from 9.9% in the
     first quarter 1996 to 10.2% in the first quarter 1997.  Sales
     representatives are compensated on a variable commission basis depending
     upon the type and gross profit of product sold.  Performance-based
     compensation paid to officers and regional, sales and production managers
     decreased  $225 thousand, or 63.7%, from $353 thousand in the first quarter
     1996 to $128 thousand in the first quarter 1997, primarily due to the
     decrease in operating income.  The balance of selling, general and
     administrative expenses, primarily sales lead-generation activities,
     administrative, field operations and Marquise Financial payrolls and
     related costs and general expenses, increased $1.8 million, or 28.1%, from
     $6.4 million, or 23.6% of net sales, in the first quarter 1996 to $8.2
     million, or 27.2% of net sales, in the first quarter 1997.  The increase
     was primarily due to increased expenses relating to support personnel and
     services required to manage the Company's anticipated sales volume
     increases for the balance of the year, expanding infrastructure and finance
     subsidiary, Marquise Financial.  The increase in selling, general and
     administrative expenses, as a percentage of sales, was caused, in large
     part, by the aforementioned up-front investments in infrastructure required
     to generate the anticipated installation activity for the balance of the
     year during the first quarter, a period of seasonally slow sales.

     Operating Interest Expense

          Operating interest expense decreased from $22 thousand in the first
     quarter 1996 to $ 0 in the first quarter 1997.  Operating interest expense
     incurred in the first quarter 1996 relates to bank borrowings required to
     finance a portion of Marquise Financial receivables.  The Company utilized
     a portion of the proceeds from the June 1996 initial public offering to
     paydown all bank borrowings.  The Company has not incurred bank borrowings
     since its June 1996 initial public offering.

     Amortization of Intangibles

          Amortization of intangibles increased from $132 thousand in the first
     quarter 1996 to $143 thousand in the first quarter 1997.  The amortization
     expense relates primarily to goodwill incurred in connection with the
     September 1994 stock repurchase from management.

     Interest Income, Net

          Net interest income increased $286 thousand from $66 thousand net
     interest expense in the first quarter 1996 to $220 thousand net interest
     income in the first quarter 1997, primarily due to increased interest
     income from invested cash balances and the reduction of interest expense
     related to the notes payable to certain of the Company's senior managers in
     connection with the September 1994 stock repurchase from management.  $800
     thousand and $3.2 million of notes payable to senior managers were repaid
     in March and June 1996, respectively.

     Income Tax Provision

          The Company's income tax provision decreased from $299 thousand, or an
     effective rate of 46.1%, for the first quarter 1996 to $99 thousand, or an
     effective rate of 39.0%, for the first quarter 1997.  The difference in the
     effective income tax rate and the federal statutory rate (34%) is due
     primarily to amortization of intangibles which are not deductible for
     income tax purposes and the effect of state income taxes and, in the first
     quarter 1996, the effect on state income taxes pursuant to the tax
     agreement between the Company and Globe which was terminated in June 1996.

     LIQUIDITY AND CAPITAL RESOURCES

          The Company's primary capital needs have been to fund the growth of
     the Company, the September 1994 stock repurchase from management, and, more
     recently, to fund the operations of the Company's consumer finance
     subsidiary, Marquise Financial.  The Company's primary sources of liquidity
     have been cash flow from operations, borrowings under its bank credit
     facility, and, in June 1996, from the net proceeds of its initial public
     offering.  The Company's core sales and installation business is not
     capital intensive.  Capital expenditures for 1995, 1996 and the first three
     months of 1997 were approximately $888 thousand, $461 thousand and $341
     thousand, respectively.  Capital expenditures  for the next twelve months
     are expected to approximate $3.0 million, primarily related to ongoing
     upgrading and maintenance of the Company's information technology systems. 
     Future requirements for capital expenditures are expected to be funded by
     cash flow from operations.  On April 30, 1997, the Company announced a
     stock repurchase program to repurchase up to 500,000 shares of its common
     stock.  The Company believes that it has sufficient operating cash flow,
     working capital base, available bank line of credit as well as additional
     financing currently being pursued by the Company with respect to Marquise
     Financial to meet all of its obligations for the foreseeable future,
     including ongoing funding for Marquise Financial, for the stock repurchase
     program announced in April 1997, and for the development and expansion of
     complementary new products and services.

          In November 1995, the Company commenced the operations of Marquise
     Financial, its consumer finance subsidiary.  Marquise's primary objective
     is to support, along with other designated third-party finance companies,
     the Company's requirement for providing financing to its core installation
     business customers.  In the fourth quarter 1996, as a follow-on objective
     to expanding Marquise Financial's consumer financing markets and products,
     Marquise introduced a new finance product   fixed rate loans secured by
     developed residential real estate   to a segment of its creditworthy
     customers that cannot obtain unsecured consumer loans.  In 1997, the
     Company anticipates that Marquise Financial's business will expand in at
     least two additional ways.  First, Marquise Financial may purchase from
     third parties portfolios of secured receivables.  Secondly, Marquise
     Financial may originate secured receivables from customers of entities
     other than the Company and its affiliates.  The entities may not
     necessarily engage in business in any of the Company's product lines;
     however, as a general proposition, they are all expected to operate
     businesses related to installed home improvement products and services. 
     The Company is continually mindful of the attendant risk in consumer
     financing and plans to increase its consumer finance receivable portfolio
     at a measured pace commensurate with its available resources and acceptable
     levels for losses on finance receivables.  Marquise Financial has been
     capitalized and funded with the Company's excess operating cash flow and
     secured borrowings under the Company's $15 million bank line of credit,
     which was subsequently paid down with a portion of the proceeds from the
     Company's June 1996 initial public offering.  At March 31, 1997, Marquise
     Financial had approximately $6.8 million in net finance receivables. 
     During the first quarter of 1997, Marquise Financial loaned approximately
     $1.8 million in secured finance receivables.  At March 31, 1997, Marquise
     had approximately $2.5 million in outstanding commitments of the fixed rate
     loans secured by developed residential real estate.  The Company
     anticipates that its existing cash balances, the bank line of credit, the
     sale of Marquise Financial's consumer loan finance receivables as market
     conditions may warrant from time to time and excess cash flow from its core
     installation operations will be sufficient to satisfy the Company's
     financing cash requirements in the foreseeable future.

          In December 1996 with an initial investment of approximately $450
     thousand, the Company entered into agreements with insurance companies with
     the effect of establishing a captive insurance company.  At March 31, 1997,
     the investment in the captive insurance company had been increased to an
     aggregate amount of approximately $570 thousand.  The primary objective of
     this captive insurance business is to provide the means for offering
     workers' compensation and general liability insurance coverage, solely for
     Company installations, to qualified installers as the Company seeks to
     maintain and expand its core complement of independent installers. 
     Premiums are immediately collected through deductions to payments to
     installers; and the excess cash balances, after administrative expenses,
     are invested, pursuant to agreement, with the insurance companies.  Losses
     are comprised of actual claims paid, reserves for open claims and
     allowances for incurred but not reported claims.  The Company maintains
     individual and aggregate stop-loss reinsurance coverage at levels deemed to
     be adequate by management of the Company.  Premiums collected in the first
     quarter 1997 were not significant.

          In June 1996, the Company issued 2,824,950 shares of Common Stock
     (including underwriters' over-allotment option) at $13 per share in its
     initial public offering.  Proceeds from the offering, net of underwriting
     commissions and related expenses totaling $3.8 million, were $33.0 million.
     A portion of the offering proceeds was used to pay a $8.6 million special
     dividend to pre-offering stockholders, repay all borrowings aggregating
     $11.9 million under the bank line of credit (used to finance Marquise
     Financial receivables) and repay $3.2 million of notes to senior managers
     related to the September 1994 stock repurchase.

          From its inception in June 1993, the Company has generated cash flow
     from operations of approximately $16.4 million.  The Company used $12.5
     million of cash in connection with the repurchase of 40.2% of its Common
     Stock in September 1994, $2.3 million for capital expenditures and $5.0
     million for the initial funding of Marquise Financial's consumer financing
     activities.  At March 31, 1997, the Company had approximately $20.3 million
     in cash and cash equivalents and trade receivables and net working capital
     of $22.0 million.  At March 31, 1997, the Company had available $15 million
     in bank line of credit and $1.6 million total debt to management
     stockholders.  At March 31, 1997, the Company had no amounts outstanding
     under its bank line of credit.

          The Company's results of operations may fluctuate from year to year or
     quarter to quarter due to a variety of factors.  The Company historically
     has experienced lower levels of sales and profitability during the period
     from mid-November through mid-March, impacting the first and fourth quarter
     of each year.  The Company believes that this seasonality is caused by
     winter weather in certain of the Company's markets located in the
     northeastern and north central U.S. and by rainy weather, each of which
     limits the Company's ability to install exterior home improvement products.

          Certain statements contained herein which are not of a historical
     nature, including without limitation, statements addressing the beliefs,
     plans, objectives, estimates or expectations of the Company or future
     results or events constitute "forward-looking statements" within the
     meaning of the Private Securities Litigation Reform Act of 1995.  Such
     forward-looking statements involve known and unknown risks, including, but
     not limited to, general economic and business conditions, matters related
     to the Sears license, warranty exposure, the Company s reliance on sales
     associates and on the availability of qualified independent installers, and
     conditions in the installed home improvement industry.  There can be no
     assurance that actual results, performance or achievements of the Company
     will not differ materially from any future results, performance or
     achievements expressed or implied by such forward-looking statements.  The
     Company provides cautionary statements, detailed in Securities and Exchange
     Commission filings, including, without limitation, the Company's 1996
     Annual Report on Form 10-K, which identify specific factors that could
     cause actual results or events to differ materially from those described in
     the forward-looking statements.  The Company undertakes no obligation to
     update publicly any forward-looking statement whether as a result of new
     information, future events or otherwise.

                             PART II.  OTHER INFORMATION

     ITEM 5.   OTHER INFORMATION

               On April 30, 1997, the Board of Directors of the Company approved
     a stock repurchase program to repurchase up to 500,000 shares of common
     stock.

     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

               (a)  Exhibits

                    (27)  Financial Data Schedule

                    (99)  Press release regarding stock repurchase program

               (b)  No reports on Form 8-K were filed during the quarter.


                                      Signatures


          Pursuant to the requirements of the Securities Exchange Act of 1934,
     the registrant has duly caused this report to be signed on its behalf by
     the undersigned thereunto duly authorized.


                                         DIAMOND HOME SERVICES, INC.

 
                                               /s/ Richard G. Reece
     Date:  May 14, 1997                 By: --------------------------
                                                Richard G. Reece
                                                Vice President and
                                                Chief Financial Officer
                                                (For the Registrant and as 
                                                 Principal Financial Officer)