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, 1998

                                       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 Identification
No.)
incorporation or organization)

                  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 April
30, 1998, the latest practicable date, was 8,507,375 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
                                                                                  1998             1997
                                                                               ($ in thousands, except per
                                                                                       share data)

                    <S>                                                            <C>              <C>    
                    Net sales . . . . . . . . . . . . . . . . . . . . . .          $28,876          $30,175

                    Cost of sales                                                   16,189           16,812
                    Gross profit  . . . . . . . . . . . . . . . . . . . .           12,687           13,363
                    Operating expenses:
                        Selling, general, and administrative expense  . .           12,289           13,186
                        Operating interest expense  . . . . . . . . . . .               55                0
                        Amortization expense  . . . . . . . . . . . . . .              160              143
                    Operating income  . . . . . . . . . . . . . . . . . .              183               34
                    Interest income, net  . . . . . . . . . . . . . . . .              126              220
                    Income before income taxes  . . . . . . . . . . . . .              309              254
                    Income tax provision  . . . . . . . . . . . . . . . .              124               99
                    Net income  . . . . . . . . . . . . . . . . . . . . .             $185             $155

                    Net income per share:
                         Basic  . . . . . . . . . . . . . . . . . . . . .             $.02             $.02
                         Diluted  . . . . . . . . . . . . . . . . . . . .             $.02             $.02

                    Weighted average number of common shares
                         outstanding:
                         Basic  . . . . . . . . . . . . . . . . . . . . .        8,507,375        9,079,675
                         Diluted  . . . . . . . . . . . . . . . . . . . .        8,507,375        9,192,000


See accompanying notes.

</TABLE>

<TABLE>
                  DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                              MARCH 31, 1998             December 31, 1997
                                                                                (Unaudited)
                                                                                             (In thousands)
                                                                  ASSETS

                 <S>                                                                   <C>                          <C>   
                 Current assets
                   Cash and cash equivalents . . . . . . . . . . . . .                 $7,480                       $9,966
                   Accounts receivable . . . . . . . . . . . . . . . .                  7,554                        6,630
                   Refundable income                                                      746                          986
                   taxes...................................
                   Prepaids  and other current assets  . . . . . . . .                  2,293                        1,959
                 Total current assets  . . . . . . . . . . . . . . . .                 19,411                       20,413

                 Finance company accounts receivable, net  . . . . . .                  9,694                        8,758

                 Net property and equipment  . . . . . . . . . . . . .                  5,808                        5,546
                 Intangible assets, net  . . . . . . . . . . . . . . .                 16,363                       16,514
                 Deferred income taxes . . . . . . . . . . . . . . . .                  1,893                        1,892
                 Other . . . . . . . . . . . . . . . . . . . . . . . .                  4,479                        3,466
                 Total assets  . . . . . . . . . . . . . . . . . . . .                $57,648                      $56,589


                                                LIABILITIES AND COMMON STOCKHOLDERS' EQUITY

                 Current Liabilities
                   Due to bank . . . . . . . . . . . . . . . . . . . .                 $3,300                       $2,050
                   Accounts payable and accrued liabilities  . . . . .                  9,617                       10,070
                   Due to stockholders . . . . . . . . . . . . . . . .                    554                          554
                 Total current liabilities . . . . . . . . . . . . . .                 13,471                       12,674
                 Long-term liabilities:
                   Warranty and retention  . . . . . . . . . . . . . .                  9,355                        9,161
                   Due to stockholders . . . . . . . . . . . . . . . .                    399                          544
                 Total long-term liabilities . . . . . . . . . . . . .                  9,754                        9,705
                 Common stockholders' equity . . . . . . . . . . . . .                 34,423                       34,210
                 Total liabilities and common stockholders'
                   equity  . . . . . . . . . . . . . . . . . . . . . .                $57,648                      $56,589
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)
                                                                                                     1998            1997

            <S>                                                                                         <C>             <C> 
            Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $185            $155
              Adjustments to reconcile net income to net cash provided by (used in) operating
                 activities:
                 Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . . . .          263             224
                 Deferred income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (467)              64
                  Changes in operating assets and liabilities:
                   Accounts receivable and other assets   . . . . . . . . . . . . . . . . . . .      (1,752)           1,436
                   Accounts payable and accrued expenses  . . . . . . . . . . . . . . . . . . .        (453)         (5,366)
                   Warranty and retention   . . . . . . . . . . . . . . . . . . . . . . . . . .          194             340
              Net cash used in operating activities   . . . . . . . . . . . . . . . . . . . . .      (2,030)         (3,147)
            Investing activities:
              Consumer finance loans originated, net of collections   . . . . . . . . . . .            (936)         (1,529)
              Advances to "captive" insurance company and other   . . . . . . . . . . . . . . .        (288)           (542)
              Capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (365)           (341)
              Net cash used in investing activities   . . . . . . . . . . . . . . . . . . . . .      (1,589)         (2,412)
            Financing activities: 
              Borrowings on bank line of credit, net  . . . . . . . . . . . . . . . . . . . . .        1,250              --
              Payments on notes receivable from officers for treasury stock and other   . . . .           28             212
              Payments due to stockholders  . . . . . . . . . . . . . . . . . . . . . . . . . .        (145)            (84)
              Net cash provided by financing activities   . . . . . . . . . . . . . . . . . . .        1,133             128
              Net decrease in cash and cash equivalents   . . . . . . . . . . . . . . . . . . .      (2,486)         (5,431)
              Cash and cash equivalents at beginning of period  . . . . . . . . . . . . . . . .        9,966          18,982
              Cash and cash equivalents at end of period  . . . . . . . . . . . . . . . . . . .
                                                                                                      $7,480         $13,551
              Supplemental cash flow disclosure:
                 Interest paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $55             $--
                 Income taxes paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $--             $52
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,  1998 are  not
necessarily indicative of  the results that may be expected  for the year ending
December 31, 1998.  For further information, refer to the consolidated financial
statements included in the Company's 1997 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 those estimates.

2.     CONSUMER FINANCING

       The following summarized condensed financial information for Marquise
Financial, the Company's finance subsidiary, is before elimination of inter-
company transactions in consolidation:

<TABLE>
<CAPTION>
                                                                             March 31, 1998            December 31, 1997
                                                                              (Unaudited)
                 <S>                                                                 <C>                            <C>  
                 ASSETS:
                 Cash                                                                    $309                           $23
                 Financing receivables, net                                             9,694                         8,758
                 Other assets                                                           1,007                         1,046
                 Total assets                                                         $11,010                        $9,827
                 LIABILITIES AND STOCKHOLDER'S EQUITY:
                 Due to Bank                                                           $3,300                        $2,050
                 Due to Diamond Exteriors, Inc.                                         7,321                         7,388
                 Other                                                                    129                           147
                 Total liabilities                                                     10,750                         9,585
                 Total stockholder's equity                                               260                           242
                 Total liabilities and stockholder's equity                           $11,010                        $9,827
</TABLE>

Results of operations for the three months ended March 31, 1998 and 1997,
respectively:

<TABLE>
<CAPTION>                                                                        
                                                                          Three Months Ended
                                                                               March 31
                                                                           1998         1997
                                                                             (Unaudited)

                 <S>                                                         <C>         <C> 
                 Financing income                                            $375        $239
                 General and administrative expenses (1)                      457         349

                 Loss before tax benefit                                       82         110
                 Income tax benefit                                            33          43
                 Net loss                                                     $49         $67

(1) Includes interest expense paid to Diamond and provision for credit losses.

</TABLE>

Cash flow for the three months ended March 31, 1998 and 1997, respectively:

<TABLE>
<CAPTION>
                                                               Three Months Ended March 31
                                                                                    1998                  1997
                                                                                           (Unaudited)
                 <S>                                                                  <C>                 <C>    
                 Cash at beginning of period                                            $23                   $50
                 Net cash used in operating activities                                 (82)                  (67)
                 Net cash used in investing activities                                (815)               (1,700)
                 Net cash provided by financing activities                            1,183                 1,999
                 Cash at end of period                                                 $309                  $282
</TABLE>

       At March 31, 1998, Marquise  Financial had approximately $2.0 million  in
approved but not funded loan commitments.

3.     SUBSEQUENT EVENT

       On April 20, 1998, the Company acquired all of the issued and outstanding
capital  stock of Reeves Southeastern Corporation  for approximately $42 million
in cash and notes.  In connection with the acquisition, the Company replaced its
$15  million unsecured bank line of credit  with a $45 million secured bank line
of credit.

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

RESULTS OF OPERATIONS

FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997

Net Sales

       Net sales  decreased $1.3 million,  or 4.3%, from  $30.2 million for  the
first  quarter 1997  to $28.9  million for  the first  quarter 1998.   Net sales
attributable to roofing and gutter products and services decreased $1.6 million,
or 7.9%, to $18.6 million in the  first quarter 1998.  Net sales attributable to
fencing products and services increased $321 thousand, or 9.1%,  to $3.8 million
in the first  quarter of 1998.   Net sales  attributable to garage doors,  entry
doors, and other products and services decreased $170 thousand, or 2.9%, to $5.7
million  in  the  first   quarter  1998.    Net  sales  attributable  to  credit
participation fee  income increased $6  thousand to  $356 thousand in  the first
quarter 1998.  Net sales attributable to finance  interest income increased $136
thousand to  $375  thousand on  receivables financed  by  the Company's  finance
subsidiary,  Marquise  Financial.    Backlog,  defined  as  jobs  sold  but  not
installed, increased $1.2 million from $10.9 million at the end of December 1997
to $12.1  million at the end of the first  quarter 1998.  Backlog decreased $1.9
million from $14.8 million at the  end of December 1996 to $12.9 million  at the
end of the first quarter 1997.

Gross Profit

       Gross  profit decreased $676  thousand, or  5.1%, from $13.4  million, or
44.3% of net sales, for the first quarter 1997 to $12.7 million, or 43.9% of net
sales, for the first quarter 1998.  The decrease in gross profit, expressed as a
percentage  of  net  sales,  resulted from  a  decrease  in  proprietary product
offerings and an increase in the balance  of sales to lower margin products  and
services, partially offset by a  $142 thousand increase in credit  participation
fee income and  in finance interest income.   The license fee  incurred to Sears
decreased $288 thousand, or 8.9%,  from $3.2 million, or 10.9% of  net installed
sales, for  the first quarter 1997  to $2.9 million,  or 10.4% of  net installed
sales, for the first quarter 1998.  The decrease  in the license fee incurred to
Sears for the first quarter 1998 was due to an  overall decrease in sales and to
a shift in the balance of sales, primarily roofing repairs, to lower 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 decreased $1.1
million, or  6.9%, from $16.0 million, or 54.0%  of net installed sales, for the
first  quarter 1997 to $14.9 million,  or 52.9% of net  installed sales, for the
first  quarter 1998.    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 decreased $897 thousand, or
6.8%, from $13.2 million in the first quarter 1997 to $12.3 million in the first
quarter 1998 and, as a percentage  of net sales, decreased from 43.7% to  42.6%.
The reduction in selling, general and administrative expenses resulted primarily
from decreased expenses  associated with lower net  sales, and reduction  of the
number  of  and the  cost  of  recruiting  and  training new  sales  associates,
partially offset by  expenses related to the  hiring of additional 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 decreased $511 thousand, or 28.6%, from $1.8 million for the
first  quarter 1997 to $1.3 million for  the first quarter 1998; as a percentage
of  net sales,  direct advertising  expense decreased  from 5.9%  for the  first
quarter  1997 to 4.4%  for the first  quarter 1998,  reflecting decreased direct
advertising  placements  and below  plan  lead  generating effectiveness  of  ad
placements during the quarter.  Selling commission  expense, including attendant
payroll-related benefits, decreased $212 thousand, or 7.0%, from $3.0 million in
the  first  quarter  1997 to  $2.8  million  in the  first  quarter  1998; as  a
percentage of  net installed  sales, selling  commission expense  decreased from
10.2%  to 9.9% in the first  quarter 1998. 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 field, sales
and  production   managers  remained  relatively  constant   at  $100  thousand,
commensurate with the change in pretax  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, decreased $175 thousand, or 2.1%, from $8.3 million,
or 27.5% of net  sales, in the first quarter  1997 to $8.1 million, or  28.1% of
net sales,  in the  first  quarter 1998.   The  decrease  was primarily  due  to
decreased  expenses related  to  recruiting and  training new  sales associates,
partially  offset by  support  personnel and  services  required to  manage  the
Company's  anticipated sales  volume  increases,  expanding  infrastructure  and
finance subsidiary, Marquise Financial.

Operating Interest Expense

       Operating interest expense increased from $0 in the first quarter 1997 to
$55  thousand in  the first quarter  1998.   The increase  in operating interest
expense  resulted from the Company's finance  subsidiary's borrowings during the
quarter.

Amortization of Intangibles

       Amortization  of intangibles  increased from $143  thousand in  the first
quarter  1997 to  $160 thousand  in the  first quarter  1998.   The amortization
expense  relates primarily to goodwill incurred in connection with the September
1994 stock repurchase from management.

Interest Income, Net

       Net  interest income  decreased $94  thousand from  $220 thousand  in the
first quarter 1997 to $126 thousand in the first  quarter 1998, primarily due to
decreased interest income from lower invested cash balances.

Income Tax Provision

       The Company's income  tax provision  increased from $99  thousand, or  an
effective rate of  39.0%, for  the first quarter  1997 to  $124 thousand, or  an
effective rate of  40.1%, for  the first quarter  1998.   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.

LIQUIDITY AND CAPITAL RESOURCES

       The Company's primary  capital needs have been to fund  the growth of the
Company, to fund the  September 1994 stock repurchase from management, and, more
recently, to fund the  operations of the Company's 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, the
net  proceeds of  its initial  public offering.   The  Company's core  sales and
installation  business is not capital intensive.  Capital expenditures for first
quarter 1998  and years  1997 and  1996 were  approximately $365  thousand, $4.3
million, and $461  thousand, respectively.   Capital expenditures  for 1998  are
expected to approximate $3.0 million, primarily related to ongoing new equipment
purchases  and software  development  for the  Company's information  technology
systems.  Future requirements  for new information technology and  other capital
expenditures are  expected  to  be  funded  by cash  flow  from  operations  and
operating leases.  On April  30, 1997, the Company announced a  stock repurchase
program to repurchase up to 500,000 shares of its common stock and on August 12,
1997, the Company increased the number  of shares it is authorized to repurchase
by  500,000 to 1,000,000 shares.  During the  second and third quarters 1997 the
Company purchased 572,300 shares of its common stock for $4.7 million.  

       On April 20, 1998, the Company acquired all of the issued and outstanding
stock of Reeves Southeastern Corp. for approximately $42 million.  In connection
with the Reeves acquisition, in April 1998, the Company replaced its $15,000,000
unsecured bank  line of credit with a $45,000,000 secured syndicated bank credit
facility.  The credit facility is for a term of five  years expiring April 2002.
The credit facility  provides, among other things: 1) $30,000,000  in term notes
(to be used solely for the Reeves acquisition) with quarterly principal payments
of $1,047,000  commencing in December 1998; and  2) a $15,000,000 revolving line
of credit  (to be  used for  Reeves'  working capital  requirements and  general
corporate purposes).   The term notes  and revolving line of  credit provide for
monthly interest payments at varying premiums over LIBOR or bank prime rates, at
borrower's option, based on  EBITDA coverage ratios.  Through the  first quarter
1999,  the interest rates  are fixed as  follows:  1)   Term Notes:   LIBOR plus
2.50% or prime plus .50%; and 2)  Revolving line of credit:  LIBOR plus 2.00% or
prime  plus  .50%.   The  terms  of the  credit  facility  contain, among  other
provisions, restrictive requirements for maintaining cash flow and debt coverage
ratios, minimum net worth, restrictions on incurring additional debt,  dividends
and stock repurchases.  Deferred loan fees and costs are amortized over the term
of the credit facility (5 years) on a straight-line basis. 

       The  Company believes that it has sufficient operating cash flow, working
capital  base, and available bank lines of credit to meet all of its obligations
for the foreseeable  future, including ongoing  funding for Marquise  Financial,
for  the  stock  repurchase  program  announced  in  1997,  for  investments  in
information technology, and for the  acquisition, development, and expansion  of
complementary new products and services and markets.

       In  November  1995, the  Company  commenced  the operations  of  Marquise
Financial.    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.  During the second quarter 1997, Marquise Financial expanded its scope of
operations,  in part  to  leverage its  consumer  finance infrastructure  to  i)
purchase from third parties portfolios of secured receivables, and ii) originate
secured  receivables  from  customers  of, and/or  purchase  individual  secured
receivables originated by, entities  other than the Company and  its affiliates.
These entities do  not necessarily engage  in business in  any of the  Company's
product lines.   As a  general proposition, these  entities are all  expected to
operate  businesses related to installed home improvement products and services,
although from  time to time  Marquise Financial  may also originate  or purchase
receivables  secured by commercial real estate or otherwise acquire or originate
loans   that  do  not   constitute  obligations  arising   from  installed  home
improvements.    The  outstanding  principal amount  of  individual  receivables
purchased  by  Marquise  Financial from  entities  other  than  the Company  may
significantly exceed the  average amount  of all receivables  owned by  Marquise
Financial.   The Company  is continually  mindful of  the risks  associated with
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
borrowings under  the Company's former  $15 million  bank line of  credit, which
were subsequently  paid down with a  portion of the proceeds  from the Company's
June  1996  initial  public offering.    In  December  1997, Marquise  Financial
obtained  a $10  million secured  line of  credit and,  at March  31, 1998,  had
borrowed $3.3  million.  At March 31, 1998, Marquise Financial has approximately
$9.7  million in  net  finance receivables.    During 1997,  Marquise  Financial
originated or purchased approximately $5.5 million of fixed rate, secured loans.
At  March 31,  1998,  Marquise had  approximately  $2.0 million  in  outstanding
commitments of the fixed rate, secured  loans.  The Company anticipates that its
existing cash  balances,  the  bank  lines  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 completed  agreements with  insurance companies with  the
effect of  establishing a  captive insurance  company.  At  March 31,  1998, the
investment  in the  captive insurance  company approximated  $1.0 million.   The
primary objective of this captive insurance business is to provide the means for
offering  workers'  compensation  and   general  liability  insurance  coverage,
primarily  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   from  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  1998 and
year 1997 were approximately $80 thousand and $571 thousand, respectively.

       From its inception in June 1993, the Company has generated cash flow from
operations of  approximately $21.3 million.   The Company used $12.5  million of
cash in connection with the repurchase of 40.2% of its Common Stock in September
1994, $6.9  million for capital  expenditures and $5.0  million for  the initial
funding  of Marquise's financing activities  and start-up operations.   At March
31,  1998, the  Company  had  approximately  $15.0  million  in  cash  and  cash
equivalents and trade  receivables and net working capital of  $5.9 million.  At
March 31,  1998, the Company had $25 million  in bank lines of credit (increased
to $55  million in  April,  1998) and  $4.3 million  total  debt including  $3.3
million under its bank line of credit.

       The Company has not completed its assessment of compliance issues for the
Year 2000  date change.  The Company  has also not determined  the cost of these
compliance issues  or  the time  it will  take  to complete  compliance.   As  a
preliminary assessment, the Company believes its new investments in  information
technology systems, including software,  are Year 2000  compliant and as a  such
should not  pose significant operational problems for its computer systems.  The
Company expects to complete its full assessment of the Year 2000 issue not later
than  December  31, 1998,  which  is  prior to  any  anticipated  impact on  its
operating systems.    As part  of  the Year  2000  assessment, the  Company  has
initiated formal communications  with all of  its significant suppliers,  third-
party finance sources, and Sears to  determine the extent to which the Company's
interface systems are  vulnerable to those parties' failure to remedy their Year
2000 issues.  There is no guarantee that the systems of other companies on which
the Company  relies will  corrected in a  timely manner or  that the  failure to
correct will not have a material adverse effect on the Company's systems.   Year
2000  modifications and  assessments are based  on management's  best estimates,
which were  derived utilizing numerous  assumptions of future  events, including
availability of certain resources and  other factors.  However, there can  be no
guarantee the  estimates and assessments will  be achieved or come  to pass, and
actual results could differ  materially from those anticipated. 

Certain  statements contained herein,  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 or unknown risks, including,  but
not limited to, general economic and business conditions, matters related to the
licensing  agreements between Sears Roebuck and Co. and Diamond Exteriors, Inc.,
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 including without limitation the fencing and
perimeter security products business.  There can be no assurance that the actual
future  results,  performance,  or  achievements expressed  or  implied  by such
forward-looking statements will occur.  Users of forward-looking statements  are
encouraged to review Item  7 of the Company's  1997 annual report on  Form 10-K,
its filings on Form 10-Q, management's discussion  and analysis in the Company's
1997 annual  report to stockholders,  the Company's  filings on  Form 8-Ks,  and
other  federal securities  law  filings for  a  description of  other  important
factors  that may  effect  the Company's  business,  results of  operations  and
financial condition.

                          PART II.  OTHER INFORMATION 


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits

              (27)   Financial Data Schedule.

       (b)  A report on Form 8-K was filed on March 6, 1998 announcing the
          Company's agreement to acquire Reeves Southeastern Corporation.



                                   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 13, 1998                                            
                                        By:_________________________
                                           Richard G. Reece
                                           Vice President and
                                           Chief Financial Officer
                                           (For the Registrant and as 
                                           Principal Financial Officer)