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 June 30, 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
  July 31, 1997, the latest practicable date, was 8,952,375 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           Six Months
                                              Ended                  Ended
                                             June 30                June 30
                                         1997        1996        1997      1996
                                       (In thousands, except per share data)
  <S>                                  <C>          <C>         <C>       <C>
   Net sales . . . . . . . . . . . .   $43,787      $41,389     $73,962   $68,482

   Cost of sales. . . . . . . . .  .    24,065       22,841      40,877   38,134 
   Gross profit. . . . . . . . . . .    19,722       18,548      33,085   30,348 
   Operating expenses:
     Selling, general, and              18,688       14,974      31,874   25,906 
     administrative expense . .  . .
     Operating interest expense. . .         0          212           0      234 
     Amortization expense . . .  . .       153          129         296      261 
   Operating income  . .  . . .  . .       881        3,233         915    3,947 
   Interest income (expense), net. .       186          (30)        406      (96)
   Income before income taxes  . . .     1,067        3,203       1,321    3,851 
   Income tax provision  . . . . . .       416        1,284         515    1,583 
   Net income  . . . . . . . . . . .      $651       $1,919        $806   $2,268 

   Net income Per Share  . . . . . .      $.07         $.30        $.09     $.36 

   Weighted average number of
      common shares and equivalent   
      outstanding . . . . . . . .  .     9,037        6,408       9,119     6,330

  See accompanying notes.

  </TABLE>

  <TABLE>
                   DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                       CONDENSED CONSOLIDATED BALANCE SHEETS
  <CAPTION>
                                                    JUNE 30,       DECEMBER 31,
                                                      1997             1996
                                                  (Unaudited)

                       ASSETS
   <S>                                             <C>               <C>
   Current assets:
    Cash and cash equivalents  . . . . . . . . .   $12,954           $18,982
    Accounts receivable  . . . . . . . . . . . .     9,984             8,621
    Finance company accounts receivable  . . . .     7,537             5,312
    Refundable income taxes  . . . . . . . . . .     1,174             1,725
     Deferred income taxes . . . . . . . . . . .
    Prepaids and other current assets  . . . . .     1,112             1,377
   Total current assets  . . . . . . . . . . . .    33,370            36,811
   Net property and equipment  . . . . . . . . .     3,102             1,607
   Intangible assets, net  . . . . . . . . . . .    16,812            16,961
   Deferred income taxes . . . . . . . . . . . .     1,463             1,313
   Other . . . . . . . . . . . . . . . . . . . .     2,913             2,101
   Total assets  . . . . . . . . . . . . . . . .   $57,660           $58,793


    LIABILITIES AND COMMON STOCKHOLDERS' EQUITY

   Current liabilities:
    Accounts payable and accrued                   $11,701           $13,767
      liabilities  . . . . . . . . . . . . . . .
    Due to stockholders  . . . . . . . . . . . .       554               554
   Total current liabilities . . . . . . . . . .    12,255            14,321
   Long-term liabilities:
    Warranty and retention . . . . . . . . . . .     8,040             7,128
    Due to stockholders  . . . . . . . . . . . .       848             1,108
   Total long-term liabilities . . . . . . . . .     8,888             8,236
   Common stockholders' equity . . . . . . . . .    36,517            36,236
   Total liabilities and common                    $57,660           $58,793
      stockholders' equity . . . . . . . . . . .

  See accompanying notes.

  </TABLE>

  <TABLE>
                            DIAMOND HOME SERVICES, INC. AND SUBSIDIARIES

                                              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                (Unaudited)
    <CAPTION>
                                                                                                             Six Months Ended 
                                                                                                                 June 30
                                                                                                              (In thousands)
                                                                                                              1997       1996
   <S>                                                                                                        <C>       <C>
   Operating activities:
   Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        $806      $2,268
     Adjustments to reconcile net income to net cash provided by (used in)
       operating activities:
        Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         463         350
        Deferred income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          35        (491)
          Changes in operating assets and liabilities:
            Accounts receivable and other assets   . . . . . . . . . . . . . . . . . . . . . . . . . . .      (996)     (3,974)
            Accounts payable and accrued expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . .    (2,066)      3,679
            Warranty and retention   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       912         961
     Net cash provided by (used in) operating activities   . . . . . . . . . . . . . . . . . . . . . . .      (846)      2,793
   Investing activities:
     Consumer finance loans originated, net of collections   . . . . . . . . . . . . . . . . . .            (2,225)    (15,840)
     Advances to "captive" insurance company and other   . . . . . . . . . . . . . . . . . . . . . . .        (512)           
     Capital expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1,660)       (219)
     Net cash used in investing activities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (4,397)    (16,059)
   Financing activities: 
     Issuance of Common Stock, net of offering expenses  . . . . . . . . . . . . . . . . . . . . . . .                  33,484
     Common Stock special dividend   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  (8,600)
     Preferred Stock redemption  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  (1,400)
     Payments on notes receivable from officers for                                                            270            
        treasury stock and other   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
     Purchases of treasury stock   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (795)           
     Payments due to stockholders  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (260)     (4,387)
     Net cash provided by (used in) financing activities   . . . . . . . . . . . . . . . . . . . . . .        (785)     19,097
     Net increase (decrease) in cash and cash equivalents  . . . . . . . . . . . . . . . . . . . . . .      (6,028)      5,831
     Cash and cash equivalents at beginning of period  . . . . . . . . . . . . . . . . . . . . . . . .      18,982       4,715
     Cash and cash equivalents at end of period  . . . . . . . . . . . . . . . . . . . . . . . . . . .     $12,954     $10,546

     Supplemental cash flow disclosure:
        Interest paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $0        $738
        Income taxes paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $90      $1,883


   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 and
  six-month period ended June 30, 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 those estimates.

  2.   CONSUMER FINANCING

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

  <TABLE>
  <CAPTION>
                                                      June 30,   December 31,
                                                        1997          1996
                                                    (Unaudited) 

  <S>                                                  <C>         <C>
  Assets:
  Cash  . . . . . . . . . . . . . . . . . . . . .          $0         $50
  Financing receivables . . . . . . . . . . . . .       7,537       5,312
  Other assets  . . . . . . . . . . . . . . . . .         503         349
                                                       $8,040      $5,711

  Liabilities and stockholder's equity:
  Due to Diamond Exteriors, Inc.  . . . . . . . .      $7,772      $5,623
  Other . . . . . . . . . . . . . . . . . . . . .          15          50
  Total liabilities . . . . . . . . . . . . . . .       7,787       5,673
  Total stockholder's equity  . . . . . . . . . .         253          38
  Total liabilities and stockholder's equity  . .      $8,040      $5,711


  Results of operations for the three months and six months ended June 30, 1997
  and 1996, respectively:

  
</TABLE>
<TABLE>
  <CAPTION>

                                              Three Months        Six Months
                                             Ended June 30      Ended June 30
                                             1997      1996     1997      1996
   <S>                                       <C>       <C>      <C>       <C>
   Financing income  . . . . . . . . . . . . $335      $454     $574      $493
   General and administrative expenses (1) .  643       490      992       667
   Loss before tax benefit . . . . . . . . .  308        36      418       174

   Income tax benefit  . . . . . . . . . . .  120        15      163        70
   Net loss  . . . . . . . . . . . . . . . . $188       $21     $255      $104

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

  </TABLE>


  Cash flow for the six months ended June 30, 1997 and 1996, respectively:

  <TABLE>
  <CAPTION>
                                                       Six Months Ended June 30
                                                        1997            1996
                                                             (Unaudited)
   <S>                                                <C>           <C>
   Cash at beginning of period . . . . . . . . . .       $50             $0
     Net cash used in operating activities . . . .      (255)          (104)
     Net cash used in investing activities . . . .    (1,944)       (16,444)
     Net cash provided by financing activities . .     2,149         17,152
     Cash at end of period . . . . . . . . . . . .       $ 0           $604

  </TABLE>


       At June 30, 1997, Marquise Financial had approximately $1.1 million in
  approved but not funded loan commitments.

  3.   Earnings per Share

       At June 30, 1997 and 1996, the Company had 9,007,375 and 9,074,900
  common shares, respectively, outstanding.  During the second quarter 1997,
  the Company purchased for treasury stock 72,300 common shares.

       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 impact is not sufficient to
  change the reported primary earnings per share for the second quarter and six
  months ended June 30, 1997 and 1996.  Similarly, the impact of Statement 128
  on the calculation of fully diluted earnings per share will be negligible.


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

  RESULTS OF OPERATIONS

  Second Quarter 1997 Compared to Second Quarter 1996

  Net Sales

         Net sales increased $2.4 million,  or 5.8%, from $41.4 million  for the
  second  quarter   1996  to  $43.8   million  for  the   second  quarter  1997.
  Approximately 34.7% of the  increase in net sales was attributable  to roofing
  and gutter products and services,  net sales of which increased $831  thousand
  to  $26.3 million for  the second  quarter 1997.   Approximately 48.2%  of the
  increase in net sales was attributable to garage  door and entry door products
  and services, net  sales of which increased  $1.2 million to $6.4  million for
  the second quarter 1997.   Approximately  27.9% of the  increase in net  sales
  was attributable  to fencing  and other  products and services,  net sales  of
  which increased  $668  thousand to  $10.4 million  for the  second quarter  of
  1997.    The foregoing  increases  in net  sales  were partially  offset  by a
  decrease in  credit participation  fee income,  primarily from  Sears and  its
  affiliates  on installed sales financed by Sears  and its affiliates and other
  third-party  finance  companies, of  $139  thousand  to  $420  thousand and  a
  decrease in interest income of  $119 thousand to $335 thousand on  receivables
  financed by  the Company's  consumer finance  subsidiary, Marquise  Financial.
  The second quarter increase in net sales  was due primarily to: i) an increase
  in higher  priced proprietary products partially  offset by a  decrease in the
  number of installations, and  ii) an increase in the number of leads generated
  and the  average number  of sales  associates during  the comparative  periods
  from 698 to  852, partially offset by  a decrease in credit  participation fee
  income  and finance interest  income.  Backlog, defined  as jobs  sold but not
  installed, was  $20.2 million  and $18.0  million at  June 30,  1997 and  1996
  respectively.

  Gross Profit

         Gross profit  increased $1.2 million,  or 6.3%, from  $18.5 million, or
  44.8%  of net sales, for the second quarter 1996 to $19.7 million, or 45.0% of
  net  sales, for  the  second  quarter 1997.    The  increase in  gross  profit
  resulted from an increase in proprietary product  offerings and an increase in
  balance  of sales to higher margin  products and services, partially offset by
  a  $258 thousand decrease  in credit  participation fee income  and in finance
  interest income.  The license  fee incurred to Sears increased  $303 thousand,
  or 7.0%, from $4.3  million, or 10.7% of net  installed sales, for the  second
  quarter 1996 to $4.6 million, or 10.8% of net installed sales,  for the second
  quarter 1997.   The increase  in the  license fee  incurred to  Sears for  the
  second quarter  1997 was due to  the increase in  sales 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  $1.7  million, or
  7.9%, from  $21.9 million,  or 54.2% of  net installed  sales, for the  second
  quarter  1996 to  $23.6  million, or  54.9% of  net  installed sales,  for the
  second 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 $3.7  million,
  or 24.8%, from  $15.0 million in the second  quarter 1996 to $18.7  million in
  the second  quarter 1997  and, as a  percentage of  net sales, increased  from
  36.2% to 42.7%.  The increase in selling, general and administrative  expenses
  resulted primarily  from expenses  associated  with increased  net sales,  the
  increased  number  of  and  the cost  of  recruiting  and  training  new sales
  associates  and 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  increased $1.2 million,  or 53.5%, from  $2.2 million for
  the second  quarter 1996 to  $3.4 million  for the second  quarter 1997; as  a
  percentage of  net sales, direct  advertising expense increased  from 5.3% for
  the  second quarter  1996  to 7.6%  for  the second  quarter 1997,  reflecting
  increased  direct  advertising  placements  and  below  plan  lead  generating
  effectiveness of  ad  placements  during  the  quarter.    Selling  commission
  expense,  including   attendant  payroll-related   benefits,  increased   $461
  thousand, or  11.1%, from  $4.1 million  in the  second quarter  1996 to  $4.6
  million in the  second quarter 1997; as  a percentage of net  installed sales,
  selling  commission  expense increased  from  10.3%  to  10.7%  in the  second
  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  $551 thousand, or 60.0%, from $917 thousand  in
  the  second  quarter  1996  to  $366  thousand  in  the  second  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 $2.7  million, or  34.7%,
  from $7.7 million, or 18.7% of net sales, in  the second quarter 1996 to $10.4
  million, or 23.8% of net sales, in the second quarter 1997.  The  increase was
  primarily due to  increased expenses related  to recruiting  and training  new
  sales associates and  support personnel and  services required  to manage  the
  Company's  anticipated sales volume increases for  the balance of the year and
  beyond, expanding  infrastructure and finance subsidiary,  Marquise Financial.
  The increase in  selling, general and administrative expenses, as a percentage
  of  sales,  is  caused,  in   large  part,  by  the   aforementioned  up-front
  investments in infrastructure required  to generate the anticipated  sales and
  installation activity for the balance of the year and beyond.

  Operating Interest Expense

         Operating interest expense decreased from  $212 thousand in the  second
  quarter 1996  to $0 in  the second quarter 1997.   Operating interest expense
  incurred in  the second  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 $129  thousand in the second
  quarter 1996 to  $153 thousand in the  second quarter 1997.   The amortization
  expense  relates  primarily  to  goodwill  incurred  in  connection  with  the
  September 1994 stock repurchase from management.

  Interest Income (Expense), Net

         Net  interest  income increased  $216  thousand from  $30  thousand net
  interest  expense in  the second  quarter 1996  to $186 thousand  net interest
  income in the second 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.

  Income Tax Provision

         The Company's income tax provision  decreased from $1.3 million,  or an
  effective  rate of 40.1%, for the second  quarter 1996 to $416 thousand, or an
  effective rate of 39.0%, for the  second 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 second quarter
  1996, the  effect on state income taxes pursuant  to the tax agreement between
  the Company and Globe which was terminated in June 1996.

  FIRST SIX MONTHS 1997 COMPARED TO FIRST SIX MONTHS 1996

  Net Sales

         Net sales increased $5.5  million, or 8.0%, from $68.5  million for the
  first  six months  1996  to  $74.0 million  for  the  first six  months  1997.
  Approximately 41.9%  of the increase in net sales  was attributable to roofing
  and gutter  products and services, net  sales of which increased  $2.3 million
  to  $46.5 million for the  first six months 1997.   Approximately 46.0% of the
  increase in net sales was attributable to garage door and entry door  products
  and services, net sales  of which increased $2.5 million to  $11.8 million for
  the first  six months 1997.  Approximately 13.4%  of the increase in net sales
  was attributable  to fencing  and other  products and services,  net sales  of
  which increased $750 thousand to $14.3 million for  the first six months 1997.
  Interest  income on  receivables financed  by  the Company's  consumer finance
  subsidiary, Marquise Financial,  increased $81 thousand to  $574 thousand  for
  the  first six  months  1997.   The  foregoing  increases  in net  sales  were
  partially offset by a decrease  in credit participation fee  income, primarily
  from Sears and its  affiliates on  installed sales financed  by Sears and  its
  affiliates and other third-party finance  companies, of $171 thousand  to $770
  thousand.  The first  six months increase in net  sales was due primarily  to:
  i) an  increase in higher priced proprietary products,  and ii) an increase in
  the number  of leads  generated and  the average  number  of sales  associates
  during the comparative periods  from 637 to 756 partially offset by a decrease
  in credit participation fee income and finance interest income.

  Gross Profit

         Gross profit  increased $2.7 million,  or 9.0%, from  $30.4 million, or
  44.3% of net sales,  for the first six months 1996 to $33.1  million, or 44.7%
  of net sales,  for the first  six months 1997.   The increase in gross  profit
  resulted from an increase in proprietary product offerings and an increase  in
  the balance  of sales to higher margin products and services, partially offset
  by a  $90 thousand decrease in credit participation  fee income and in finance
  interest income.  The  license fee incurred to Sears increased  $727 thousand,
  or  10.3%, from $7.2 million, or  10.6% of net installed  sales, for the first
  six months  1996 to $7.9  million, or  10.8% of net  installed sales, for  the
  first six months 1997.  The increase in the license fee incurred to  Sears for
  the  first six  months  1997 was  due to  the  increase in  net sales  and the
  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  $3.5  million,  or  9.9%, from  $36.1  million,  or  53.8%  of  net
  installed  sales, for the first six months 1996  to $39.6 million, or 54.5% of
  net installed  sales,  for the  first six  months  1997.   The unit  costs  of
  materials,  installation  labor  and  warranty   expense  remained  relatively
  constant during the six month period. 

  Selling, General and Administrative Expenses

         Selling, general  and administrative expenses  increased $6.0  million,
  or 23.0%, from $25.9 million in the first six months 1996  to $31.9 million in
  the first  six months 1997 and,  as a percentage of  net sales, increased from
  37.8% to 43.1%.  The increase in  selling, general and administrative expenses
  resulted  primarily  from expenses  associated with  increased net  sales, the
  increased number of and the cost of recruiting  and training  sales associates
  and 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 increased $1.7 million,  or 45.7%, from $3.7 million for the first six
  months 1996 to $5.4 million  for the first six months 1997; as a percentage of
  net sales,  direct advertising expense increased  from 5.4% for the  first six
  months  1996  to 7.3%  for the  first  six months  1997,  reflecting increased
  direct advertising placements and below plan lead  generating effectiveness of
  ad placements  during  the first  six  months.   Selling  commission  expense,
  including  attendant  payroll-related  benefits, increased  $831  thousand, or
  11.8%, from $6.7 million  in the first six months 1996  to $7.6 million in the
  first  six months  1997;  as  a percentage  of  net installed  sales,  selling
  commission expense  increased  from 10.0%  to 10.5%  in the  first six  months
  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  $776 thousand, or  61.1%, from $1.3 million in the first six months
  1996  to $494  thousand in  the first  six months  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 $4.3  million,  or 30.4%,  from $14.2
  million,  or 20.7%  of  net sales,  in  the first  six  months 1996  to  $18.5
  million,  or 24.9% of net  sales, in the first six  months 1997.  The increase
  was primarily  due to increased  expenses relating to  recruiting and training
  new sales associates  and support personnel  and services  required to  manage
  the  Company's anticipated sales volume increases for  the balance of the year
  and  beyond,  expanding   infrastructure  and  finance   subsidiary,  Marquise
  Financial.  The increase in  selling, general and administrative  expenses, as
  a percentage  of sales, is  caused, in large  part, by the aforementioned  up-
  front  investments in  infrastructure  required  to generate  the  anticipated
  sales and installation activity for the balance of the year and beyond.

  Operating Interest Expense

         Operating interest expense  decreased from  $234 thousand in  the first
  six months  1996 to $  0 in  the first  six months 1997.   Operating  interest
  expense incurred  in the  first six  months 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 $261 thousand in  the first
  six  months  1996  to  $296  thousand in  the  first  six  months  1997.   The
  amortization  expense relates  primarily to  goodwill  incurred in  connection
  with the September 1994 stock repurchase from management.

  Interest Income (Expense), Net

         Net  interest  income increased  $502  thousand from  $96  thousand net
  interest expense in  the first six months  1996 to $406 thousand  net interest
  income  in the  first six  months 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.

  Income Tax Provision

         The Company's income tax provision  decreased from $1.6 million,  or an
  effective rate of 41.1%,  for the first six  months 1996 to $515  thousand, or
  an effective rate  of 39.0%, for the first six months 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 six
  months 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  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 the  first six  months of  1997, 1996 and  1995 were
  approximately $1.7  million, $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.   During the  second
  quarter 1997 the Company  purchased 72,300 shares of its common stock for $795
  thousand and in July and August  1997  (through August 12, 1997) purchased  an
  additional 55,000 shares  and 325,000  shares for approximately  $475 thousand
  and $2.5 million, respectively.   On August 12, 1997 the Company increased the
  maximum number of  shares it can purchase  under the stock repurchase  program
  from  500,000 to  1.0  million  shares.   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
  businesses 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.    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 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 were subsequently paid down
  with a  portion of the  proceeds from the  Company's June 1996 initial  public
  offering.    At June  30,  1997,  Marquise  Financial  has approximately  $7.5
  million  in net finance  receivables.   During the  first six months  of 1997,
  Marquise  Financial originated  or  purchased  approximately $3.2  million  of
  fixed rate, secured loans.   At June 30, 1997, Marquise had approximately $1.1
  million  in outstanding  commitments of  the fixed  rate, secured  loans.  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  completed agreements with insurance companies  with the
  effect of establishing a  captive insurance  company.  At  June 30, 1997,  the
  investment  in  the   captive  insurance   company  has   been  increased   to
  approximately $660 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 six months 1997 were approximately $140 thousand.

         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 $18.7  million.    The Company  used  $12.5
  million of  cash in  connection with  the repurchase  of 40.2%  of its  Common
  Stock in  September  1994, $3.1  million  for  capital expenditures  and  $5.0
  million for  the initial funding  of Marquise  Financial's consumer  financing
  activities.  At June 30, 1997, the Company had approximately $22.9 million  in
  cash and cash  equivalents and trade  receivables and  net working capital  of
  $21.1 million.   At June 30,  1997, the Company  had available $15  million in
  bank line  of credit and $1.4  million total debt to  management stockholders.
  At  June 30, 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 expects  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 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On May 15, 1997, the Company held its Annual Meeting of Shareholders. 
  The only matter voted on by the shareholders was the election of directors to
  the Board of Directors.  By a majority of shares represented at the Annual
  Meeting, the shareholders elected directors to serve one-year terms as
  follows: Messrs. C. Stephen Clegg, James F. Bere, Jr., James M. Gillespie,
  Jacob Pollock and George A. Stinson.

         Shares were voted as follows:

                              Number of Shares of Common Stock

          Election of Directors               For          Withheld

          James F. Bere, Jr.               8,016,656        148,100
          Stephen Clegg                    8,016,706        148,050
          James M. Gillespie               8,016,856        147,900
          Jacob Pollock                    7,992,356        172,400
          George A. Stinson                8,016,556        148,200

  ITEM 5.   OTHER INFORMATION

       Effective July 21, 1997, the membership of the Board of Directors was
  expanded to six and William R. Griffin was elected a director of the Company.

  ITEM. 6.  EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits

             (27)      Financial Data Schedule

             (99.1)    Press release regarding election of William R. Griffin
                       as a director and the resignation of Frank Cianciosi.

             (99.2)    Press release regarding increase in the number of shares
                       of stock which can be purchased under the 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.


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

  Date:   August 12, 1997