<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                      FORM 10-Q

                              --------------------------



                 [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

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

                          Commission file number  0-19891

                                 SCHULER HOMES, INC.
                (Exact name of registrant as specified in its charter)

                  Delaware                                  99-0293125
         (State or jurisdiction of                       (I.R.S. employer
       incorporation or organization)                   identification no.)

                           828 Fort Street Mall, Suite 400
                             Honolulu, Hawaii  96813-4321
                 (Address of principal executive offices) (Zip code)

                                    (808) 521-5661
                 (Registrant's telephone number, including area code)

                                    Not Applicable
                 (Former name, former address and former fiscal year,
                            if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

          YES   X                        NO
              -----                          -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
                                                Outstanding at
        Class of Common Stock                   April 30, 1998
        ---------------------                   --------------
        <S>                                     <C>
            $.01 par value                        20,103,843
</TABLE>

--------------------------------------------------------------------------------
<PAGE>
                                 SCHULER HOMES, INC.

                                        INDEX
<TABLE>
<CAPTION>
<S>                                                                        <C>
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Independent Accountants' Review Report....................   3

          Consolidated Balance Sheets - March 31, 1998 and
             December 31, 1997......................................   4

          Consolidated Statements of Income - Three months
             ended March 31, 1998 and 1997..........................   5

          Consolidated Statements of Cash Flows - Three
             months ended March 31, 1998 and 1997...................   6

          Notes to Consolidated Financial Statements................   7

Item 2.   Management's Discussion and Analysis of
             Financial Condition and Results of Operations..........   10

PART II.  OTHER INFORMATION.........................................   16

SIGNATURES..........................................................   17
</TABLE>
<PAGE>

                        INDEPENDENT ACCOUNTANTS' REVIEW REPORT


The Board of Directors and Stockholders
Schuler Homes, Inc.

We have reviewed the accompanying interim consolidated balance sheet of Schuler
Homes, Inc. as of March 31, 1998, and the related consolidated statements of
income and cash flows for the three-month periods ended March 31, 1998 and 1997.
These financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants.  A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters.  It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole.  Accordingly, we do not
express such an opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying interim consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.  See Note 1.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Schuler Homes, Inc. as of December
31, 1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended (not presented herein) and in our
report dated March 5, 1998, we expressed an unqualified opinion on those
consolidated financial statements.  In our opinion, the information set forth in
the accompanying consolidated balance sheet as of December 31, 1997, is fairly
stated, in all material respects, in relation to the consolidated balance sheet
from which it has been derived.


                                         ERNST & YOUNG LLP


Honolulu, Hawaii
May 11, 1998


                                          3
<PAGE>
                                 SCHULER HOMES, INC.
                             CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                            March 31,1998   December 31, 1997
                                                            -------------   -----------------
                                                             (unaudited)
<S>                                                         <C>             <C>
ASSETS

Cash and cash equivalents (restricted-Note 2)........       $  5,305,000      $  3,842,000
Receivables .........................................          1,203,000           880,000
Prepaid income taxes ................................            328,000         1,682,000
Amount due from affiliate (Note 5) ..................             25,000            24,000
Real estate inventories (Note 3) ....................        291,004,000       291,081,000
Investments in unconsolidated joint ventures.........         14,555,000        16,026,000
Deposits.............................................          3,578,000         1,691,000
Deferred offering costs, net.........................          1,114,000         1,171,000
Notes receivable (Note 2)............................          2,359,000         2,406,000
Deferred income taxes ...............................          4,501,000         4,002,000
Intangibles, net.....................................         13,561,000        13,742,000
Other assets.........................................          3,840,000         4,024,000
                                                            ------------      ------------
Total assets.........................................       $341,373,000      $340,571,000
                                                            ------------      ------------
                                                            ------------      ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable.......................................     $  5,257,000      $ 12,805,000
Accrued expenses.......................................       12,163,000        13,207,000
Notes payable to bank (Notes 4 and 10).................       98,400,000        91,077,000
Notes payable to others................................        2,697,000         2,627,000
6-1/2% convertible subordinated debentures due 2003....       57,500,000        57,500,000
                                                            ------------      ------------

Total liabilities......................................      176,017,000       177,216,000

Commitments and contingencies (Notes 4 and 8)

Stockholders' equity (Note 9):
    Common stock, $.01 par value; 30,000,000 shares
       authorized; 20,874,927 shares issued at
       March 31, 1998 and December 31, 1997............          209,000           209,000
    Additional paid-in capital.........................       93,100,000        93,100,000
    Retained earnings..................................       77,047,000        75,046,000
    Treasury stock, at cost; 774,000 shares at
       March 31, 1998 and December 31, 1997 ...........      (5,000,000)        (5,000,000)
                                                            ------------      ------------

Total stockholders' equity.............................      165,356,000       163,355,000
                                                            ------------      ------------

Total liabilities and stockholders' equity.............     $341,373,000      $340,571,000
                                                            ------------      ------------
                                                            ------------      ------------
</TABLE>

                               See accompanying notes.


                                          4
<PAGE>

                                 SCHULER HOMES, INC.
                          CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                          Three months ended March 31,
                                                         -----------------------------
                                                              1998            1997
                                                           -----------    -----------
                                                                  (unaudited)
<S>                                                        <C>            <C>
Residential real estate sales..........................    $55,512,000    $49,995,000

Costs and expenses:
    Residential real estate sales......................     43,887,000     41,464,000
    Selling and commissions............................      3,920,000      3,463,000
    General and administrative.........................      3,770,000      2,920,000
                                                           -----------    -----------
        Total costs and expenses...........                 51,577,000     47,847,000

Income from unconsolidated joint ventures..............        358,000          7,000
                                                           -----------    -----------

    Operating income ..................................      4,293,000      2,155,000
Other income (expense).................................     (1,036,000)      (899,000)
                                                           -----------    -----------

   Income before provision for income taxes............      3,257,000      1,256,000
Provision for income taxes (Note 6)....................      1,256,000        479,000
                                                           -----------    -----------

   Net income .........................................    $ 2,001,000    $   777,000
                                                           -----------    -----------
                                                           -----------    -----------

Net income per share (Note 7):
   Basic and diluted...................................    $      0.10    $      0.04
                                                           -----------    -----------
                                                           -----------    -----------
</TABLE>

                               See accompanying notes.


                                          5
<PAGE>

                                 SCHULER HOMES, INC.
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              Three months ended March 31,
                                                                              ----------------------------
                                                                                   1998           1997
                                                                              ------------    ------------
                                                                                      (unaudited)
 <S>                                                                           <C>             <C>
OPERATING ACTIVITIES:
Net income ...............................................................    $  2,001,000    $    777,000
Adjustments to reconcile net income to net cash provided by (used in)
   operating activities:
     Depreciation and amortization expense................................         731,000         539,000
     Income from unconsolidated joint ventures............................        (268,000)        (16,000)
     Sales financed by Company ...........................................             ---        (143,000)
     Principal payments of notes receivable...............................          94,000       1,447,000
 Changes in assets and liabilities, net of effects from
   purchase of Melody
Homes and Mortgage:
         (Increase) decrease in receivables...............................        (323,000)        142,000
         (Increase) decrease in prepaid income taxes......................       1,354,000          55,000
         (Increase) decrease in real estate inventories...................        (256,000)     (5,024,000)
         (Increase) decrease in deposits..................................      (1,886,000)        (87,000)
         (Increase) decrease in other assets..............................         128,000        (454,000)
         Increase (decrease) in accounts payable..........................      (7,548,000)     (3,607,000)
         Increase (decrease) in accrued expenses..........................      (1,091,000)      1,534,000
         Change in deferred income taxes..................................        (498,000)      1,371,000
                                                                              ------------    ------------ 
 
  

            Net cash provided by (used in) operating activities...........      (7,562,000)     (3,466,000)

INVESTING ACTIVITIES:
Payment for purchase of Melody Homes and Mortgage, net of cash acquired...             ---     (29,508,000)
Advances to unconsolidated joint ventures.................................         (53,000)        (44,000)
Repayments of advances to unconsolidated joint ventures...................          42,000          64,000
Capital distributions from unconsolidated joint ventures..................       1,750,000          48,000
Purchase of furniture, fixtures, and equipment............................         (93,000)       (298,000)
                                                                              ------------    ------------
          Net cash provided by (used in) investing activities.............       1,646,000     (29,738,000)

FINANCING ACTIVITIES:
Proceeds from bank borrowings.............................................      68,415,000      57,771,000
Principal payments on bank borrowings.....................................     (61,092,000)    (22,848,000)
Advances to affiliate.....................................................         (25,000)        (27,000)
Repayment of advances to affiliate........................................          24,000          26,000
Net decrease in deferred offering costs...................................          57,000          57,000
                                                                              ------------    ------------
         Net cash provided by (used in) financing activities..............       7,379,000      34,979,000
                                                                              ------------    ------------

Increase (decrease) in cash...............................................       1,463,000       1,775,000
Cash and cash equivalents (restricted) at beginning of period.............       3,842,000       1,619,000
                                                                              ------------    ------------
Cash and cash equivalents (restricted) at end of period...................    $  5,305,000    $  3,394,000
                                                                              ------------    ------------
                                                                              ------------    ------------
</TABLE>

                               See accompanying notes.


                                          6
<PAGE>

                                 SCHULER HOMES, INC.

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   General

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with generally accepted accounting principles for
     interim financial information and with the instructions to Form 10-Q 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 adjustments)
     considered necessary for a fair presentation have been included.

     These financial statements should be read in conjunction with the Notes to
     Consolidated Financial Statements for the year ended December 31, 1997
     contained in the Company's 1997 annual report on Form 10-K.

     The Company has experienced, and expects to continue to experience,
     significant variability in quarterly sales and net income.  The results of
     any interim period are not necessarily indicative of the results that can
     be expected for the entire year.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period.  Actual results could differ from those
     estimates.

     Certain amounts in the Consolidated Statements of Cash Flows for the
     quarter ended March 31, 1997 have been reclassified to conform to the 1998
     presentation.

2.   Notes Receivable

     Notes receivable consist primarily of notes receivable on seller financed
     sales of residential units and residential lots.The notes provide for terms
     and conditions similar to those offered by financial institutions and are
     collateralized by the residential units and residential lots sold.  Certain
     of the notes are collateralized by second mortgages relating to home buyers
     who purchased homes as part of the Company's "zero-down" sales program.
     Revenue and profit recognition on such transactions are deferred until the
     down payment requirement for revenue and profit recognition is satisfied.
     In March 1997, the Company sold second mortgage notes of approximately
     $2,500,000, resulting in the recognition of sales and gross profit of
     approximately $11,303,000 and $817,000 (net of discount and collection
     reserve relating to sale), respectively (includes five sales which closed
     during the first quarter of 1997).  The collection reserve results in a
     restriction on the Company's cash in the amount of approximately $506,000.

3.   Real Estate Inventories

     Inventories which are substantially completed are carried at the lower of
     cost or fair value less cost to sell.  Fair value is determined by applying
     a risk adjusted discount rate to estimates of future cash flows.  In
     addition, land held for future development or inventories under current
     development are adjusted to fair value, only if an impairment to their
     value is indicated.

     The estimates of future cash flows require significant judgment relating to
     the level of sales prices, rate of new home sales, amount of marketing
     costs and price discounts needed in order to stimulate sales, rate of
     increase in the cost of building materials and labor, introduction of
     building code modifications, and economic and real estate market conditions
     in general.  Accordingly, there exists at any date, a reasonable
     possibility that changes in estimates will occur in subsequent periods.


                                          7
<PAGE>

     Real estate inventories at March 31, 1998 consist of the following:

<TABLE>
<CAPTION>
       <S>                                                     <C>
       Unimproved land held for future development............ $    48,912,000
       Development projects in progress.......................     201,494,000
       Completed inventory (including lots held for sale).....      40,598,000
                                                               ---------------
                                                               $   291,004,000
                                                               ---------------
                                                               ---------------
</TABLE>

     Completed inventory includes residential units which are substantially
     ready for occupancy.

4.   Notes Payable to Bank

     At March 31, 1998, $39,200,000 of the Company's line of credit is unused,
     of which $3,209, 000 is restricted as to withdrawal for outstanding but
     unused letters of credit.

     In March 1997, the Company amended its Credit Agreement, increasing the
     unsecured revolving line of credit facility from $110,000,000 to
     $137,600,000.  The facility expires on July 1, 1999 and includes an option
     for the lenders to extend the term for an additional year.  The Company can
     select an interest rate based on either LIBOR (1, 2, 3 or 6 month term) or
     prime for each borrowing.  Based on the Company's leverage ratio, as
     defined, the interest rate may vary from LIBOR plus 1.5% to 2% or prime
     plus 0% to 0.25%.  At March 31, 1998, the Company's outstanding borrowings
     were at interest rates of LIBOR plus 1.75% (7.5%) and prime plus 0% (8.5%).
     The Company's ability to draw upon its line of credit is dependent upon
     meeting certain financial ratios and covenants.

     The Company paid interest (relating to notes payable to bank, notes payable
     to others and the convertible subordinated debentures) of approximately
     $3,701,000 during the quarter ended March 31, 1998.  Interest incurred
     during the quarter ended March 31, 1998 totaled $2,942,000, of which
     approximately $2,116,000 was capitalized to real estate inventories and
     approximately $826,000 was expensed and not capitalized, as such interest
     related to assets which did not meet the requirements for capitalization.
     The difference between the amount of interest paid and the amount incurred
     is comprised of accrued interest payable. Interest, previously capitalized
     to real estate inventories, expensed as a component of cost of residential
     real estate sales during the quarters ended March 31, 1998 and 1997 totaled
     $1,694,000 and $1,466,000, respectively.

5.   Related Party Transactions

     The Company charged $25,000 for the quarter ended March 31, 1998 to James
     K. Schuler & Associates, Inc. (an affiliate) under the management agreement
     entered into between the Company and James K. Schuler & Associates, Inc.,
     pursuant to which certain management and administrative personnel of the
     Company will perform certain functions for James K. Schuler & Associates,
     Inc., to be reimbursed by James K. Schuler & Associates, Inc. At March 31,
     1998, the $25,000 was included in Amount Due from Affiliate.  Subsequent to
     March 31, 1998, the receivable was paid in full.

     From time to time, the Company engages the law firms in which directors of
     the Company are partners.  During the quarterly period ended March 31,
     1998, legal fees of approximately $103,000 to such firms were incurred by
     the Company.

6.   Income Taxes

     During the three months ended March 31, 1998,  the Company made income tax
     payments of $400,000.

7.   Net Income Per Share

     Basic net income per share for the quarters ended March 31, 1998 and 1997
     were computed using the weighted average number of common shares
     outstanding during the quarters of 20,100,927 and 20,100,177, respectively.


                                          8
<PAGE>

     The computation of diluted net income per share for the quarters ended
     March 31, 1998 and 1997 resulted in amounts greater than the basic net
     income per share.  Accordingly, the basic net income per share is also
     presented as the diluted net income per share.

8.   Commitments and Contingencies

     At March 31, 1998, the Company had under contract to purchase for
     approximately $8,880,000,  land for residential development.

     In April 1996, the Company was served with a purported class action
     complaint by owners of units and the Association of Owners of Fairway
     Village at Waikele alleging, among other things,  material construction
     defects and deficiencies, misrepresentations regarding the cost of
     insurance and  breach of a covenant of good faith and fair dealing.  The
     complaint does not specify an amount of damages, but includes a claim for
     punitive damages.  Although this litigation is at an early stage of
     discovery, based on its current understanding of the lawsuit, the Company
     believes the claims to be largely without merit and that potential third
     party defendants and insurance coverage exist to offset a material portion
     of any damages from the alleged claims.  The Court has denied the motion to
     certify the class and the litigation continues to be vigorously defended.
     A court date has been set for April 1999. If this lawsuit were decided
     adversely to the Company in all material respects, it could have a material
     adverse effect on the Company's business,  financial condition and results
     of operations.

     The Company is also from time to time involved in routine litigation or
     threatened litigation arising in the ordinary course of its business.  Such
     matters, if decided adversely to the Company, would not, in the opinion of
     management,  have a material adverse effect on the financial condition of
     the Company.

9.   Stockholders' Equity

     During March of 1998, options to purchase 183,850 shares of common stock
     were approved to be granted.

10.  Subsequent Events

     On May 6, 1998, the Company consummated its offering of $100,000,000
     aggregate principal amount of 9% Senior Notes, which are due April 15,
     2008.  The Company received net proceeds from the offering of approximately
     $97,300,000 (net of discounts and estimated offering costs of approximately
     $2,700,000).  The Company used such proceeds to repay a portion of the
     Company's borrowings under its line of credit.  The offering costs will be
     amortized over the term of the notes using the interest method.

     In April 1998, the Company amended certain provisions of its Revolving
     Credit Facility to provide for the issuance of the Senior Notes.


                                          9
<PAGE>

                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                         CONDITION AND RESULTS OF OPERATIONS


     Except for historical information contained herein, the matters discussed
in this report contain forward-looking statements that involve risks and
uncertainties.  The Company's actual results may differ materially from the
results discussed in the forward-looking statements.  Factors that might cause
such a difference include, but are not limited to, those risks discussed herein,
and other risks detailed in the Company's Annual Report on Form 10-K and other
documents filed by the Company with the Securities and Exchange Commission from
time to time.

OVERVIEW

     Schuler Homes, Inc. designs, constructs, markets and sells single-family
residences, townhomes and condominiums primarily to entry-level and first-time
move-up buyers.  The Company operates in five geographic markets:  Colorado,
Hawaii, Northern California, Oregon and Washington.

     For the quarter ended March 31, 1998, sales of residential real estate
(revenue) were $55.5 million  and operating income was $4.3 million, compared to
revenues of $50.0 million and operating income of $2.2 million during the first
quarter last year.  Net income was $2.0 million ($0.10 per share) for the
quarter ended March 31, 1998, compared to net income of $777,000 ($0.04 per
share) during the 1997 first quarter.   From the first quarter of 1997 to the
first quarter of 1998, revenues grew 11.0%, net income grew 157.5%, the number
of units closed increased from 240 to 390 and gross profit and operating margins
improved.

     On May 6, 1998, the Company consummated its offering of $100 million
aggregate principal amount of 9% Senior Notes due 208.  The Company received net
proceeds from the offering of approximately $97.3 million  (net of discounts and
estimated offering costs of approximately $2.7 million).  The Company used such
net proceeds to repay a portion of the Company's borrowings under its line of
credit.  The offering costs will be amortized over the term of the notes using
the interest method.  In April 1998, the Company amended certain portions of its
Revolving Credit Facility to provide for the issuance of the senior Notes.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the percentage
of the Company's revenues represented by each income statement line item
presented.

<TABLE>
<CAPTION>
                                                                                   % Change in Dollar Amounts
                                                  Three months ended March 31,                From
                                                        1998           1997              1997 to 1998
                                                        ----           ----              ------------
<S>                                                    <C>            <C>          <C>
Residential real estate sales...................       100.0%         100.0%                  11.0%

Costs and expenses:
    Residential real estate sales...............        79.1           82.9                    5.8
    Selling and commissions.....................         7.0            6.9                   13.2
    General and administrative..................         6.8            5.8                   29.1
                                                      ------         ------
              Total costs and expenses..........        92.9           95.6                    7.8

Income from unconsolidated joint ventures.......         0.6            0.0                5,014.3
                                                      ------         ------
    Operating income............................         7.7            4.4                   99.2
Other income (expense)..........................        (1.8)          (1.8)                  15.2
                                                      ------         ------
    Income before provision for income taxes....         5.9            2.6                  159.3
Provision for income taxes......................         2.3            1.0                  162.2
                                                      ------         ------
    Net income..................................         3.6%           1.6%                 157.5
                                                      ------         ------
                                                      ------         ------
</TABLE>


                                          10
<PAGE>

RESIDENTIAL REAL ESTATE SALES

     The Company's sales of residential real estate for the quarter ended 
March 31, 1998 were approximately $55.5 million as compared to approximately 
$50.0 million during the quarter ended March 31, 1997.  This represents an 
increase of approximately $5.5 million or 11.0%.  The increase in revenues 
reflects a larger number of unit sales closed in the first quarter of 1998 
relative to the first quarter of 1997, partially offset by a decrease in 
average sales prices.  The increased number of unit closings came primarily 
from the Colorado division (acquired January of 1997), partially offset by 
lower unit closings in the Hawaii division.  The Company's average sales 
price per unit declined to $170,000, a 3.4% decline from an average sales 
price per unit of $176,000.  The decrease in the average sales price per unit 
was primarily attributable to the lower average sales prices of  homes in 
Colorado relative to Hawaii.  During the first quarter of 1997, the Company 
recognized $10.1 million of deferred revenue related to 53 of the 70 sales 
that closed in 1996 pursuant to the Company's zero-down sales program, in 
which the Company provided new home buyers with second mortgages of up to 20% 
of the purchase price.  Revenue and profit recognition on these zero-down 
sales were deferred until the requirements for revenue and profit recognition 
were satisfied, which occurred during the first quarter of 1997 when the 
second mortgages were sold.

     The following table sets forth the number of sales closed during the
quarters ended March 31, 1998 and 1997, which includes closings of homes and
lots sold pursuant to the Company's "zero-down" sales program and 100% of the
sales closed at projects developed by the Company's joint ventures in Hawaii and
Washington.

<TABLE>
<CAPTION>
                                        Three months ended March 31
                                            1998            1997
                                            ----            ----
<S>                                         <C>             <C>
Consolidated:
  Colorado                                   242            167
  Hawaii (1)                                  59             68
  Northern California                         15            ---
  Oregon                                      10            ---
                                             ---            ---
     Total Consolidated                      326            235
Unconsolidated Joint Ventures:
  Hawaii (2)                                   3              5
  Washington (3)                              61            ---
                                             ---            ---

Total                                        390            240
                                             ---            ---
                                             ---            ---
</TABLE>

(1)  Includes homes and lots sold and closed pursuant to the Company's
     "zero-down" sales program in Hawaii.  Approximately $0.7 million of
     revenues associated with 4 "zero-down" closings were deferred during the
     first three months of 1997 until the related notes receivable are paid in
     full.  There were no "zero-down" closings in the first quarter of 1998.
(2)  Reflects 100% of the information with respect to the Company's two 50%
     owned joint ventures in Hawaii, Iao Partners and Waiakoa Estates
     Subdivision Joint Venture.
(3)  Reflects 100% of the information with respect to Stafford Homes, in which
     the Company acquired a 49% interest in July, 1997.


COSTS AND EXPENSES - RESIDENTIAL REAL ESTATE SALES

Cost of residential real estate sales represents the acquisition and development
costs of a project attributable to the homes closed.  Acquisition and
development costs primarily include land acquisition costs, sitework and
construction payments to contractors, engineering and architectural costs, loan
fees, interest and other indirect costs attributable to


                                          11
<PAGE>

development and project management activities and miscellaneous construction
costs.

     Cost of residential real estate sales increased from approximately $41.5
million during the quarter ended March 31, 1997 to approximately $43.9 million
during the same period in 1998, representing an increase of approximately $2.4
million or 5.8%.  This increase reflects a higher level of unit and dollar sales
closed the first quarter of 1998 relative to the first quarter of 1997.  As a
percentage of revenues, cost of residential real estate sold decreased to 79.1%
from 82.9%.  This decrease is largely attributable to higher average selling
prices in the Company's Colorado operation and higher gross margins in the
Company's Hawaiian operation due to lower recognition of deferred revenues
pursuant to the Company's "zero-down" sales program.

     Total interest incurred during the quarters ended March 31, 1998 and 1997
was approximately $2.9 million and $2.8 million, respectively.  Of the amounts
incurred, approximately $826,000 and $667,000 was expensed currently (included
in Other Expense) in the first quarters of 1998 and 1997, respectively, and the
remaining interest incurred was capitalized to development projects.   Interest
capitalized to projects is expensed through cost of residential real estate
sales as sales are closed and revenue is recognized in the particular project.
The amount of previously capitalized interest, which was expensed through cost
of residential real estate sales, totaled $1.7 million and $1.5 million during
the quarters ended March 31, 1998 and 1997, respectively.

     Average debt outstanding was approximately $163.1 million and $155.6
million during the first quarters of 1998 and 1997, respectively.  The Company's
average interest rate on its debt for the quarters ended March 31, 1998 and 1997
was approximately 7.3% and 7.4%, respectively.  The Company's notes payable bear
interest based on prime or LIBOR.  Changes in the prime or LIBOR rates will
affect the amount of interest being capitalized to inventory and subsequently
expensed through cost of residential real estate sales as sales are closed and
revenue is recognized.

COST AND EXPENSES - SELLING AND COMMISSIONS

     Sales and marketing costs represented approximately 7.0% and 6.9% of sales
of residential real estate during the quarters ended March 31, 1998 and 1997,
respectively.

COSTS AND EXPENSES - GENERAL AND ADMINISTRATIVE

     General and administrative expense includes salaries, office and other
administrative costs.  Indirect costs attributable to specific projects are
capitalized and deducted as part of cost of residential real estate sales.

     General and administrative expenses increased by $850,000 during the first
quarter of 1998 as compared to the same period in 1997 primarily due to
expansion at the Company's U. S. mainland divisions. As a percentage of sales,
general and administrative expense increased from 5.8% during the quarter ended
March 31, 1997 to 6.8% during the quarter ended March 31, 1998, which is a
result of the same items mentioned in the preceding sentence.

INCOME FROM UNCONSOLIDATED JOINT VENTURES

     Income from unconsolidated joint ventures represents the Company's 49%
interest in the operations of Stafford and its 50% interest in the operations
of two joint ventures in Hawaii.  The increase in this income from the first
three months of 1997 to the same period in 1998 is primarily the result of the
acquisition of the 49% interest in Stafford in July 1997.

OTHER INCOME (EXPENSE)

     Other income (expense) represents (i) interest incurred less interest
capitalized to inventory (interest expense), (ii) amortization of financing
fees, net of amounts capitalized to inventory, and (iii) amortization of
goodwill and of a covenant-not-to-compete, both as a result of the Melody Homes
acquisition; less interest income.  The increase in other expense of $137,000
from the first three months of 1997 to the comparable period in 1998 is
primarily due to an increase in interest expense.


                                          12
<PAGE>

PROVISION FOR INCOME TAXES

     The Company's effective income tax rate for the first quarters of 1998 and
1997 was approximately 38.6% and 38.1%, respectively.

VARIABILITY OF RESULTS

     The Company has experienced, and expects to continue to experience,
significant variability in sales and net income. Factors that contribute to
variability of the Company's results include:  the timing of home closings, a
substantial portion of which historically have occurred in the last month of
each quarter; the Company's ability to continue to acquire additional land on
favorable terms for future developments; the condition of the real estate
markets and economies in states in which the Company operates; the cyclical
nature of the homebuilding industry and changes in prevailing interest rates;
costs of material and labor; and delays in construction schedules caused by
timing of inspections and approval by regulatory agencies, including zoning
approvals and receipt of entitlements, the timing of completion of necessary
public infrastructure, the timing of utility hookups and adverse weather
conditions.  The Company's historical financial performance is not necessarily a
meaningful indicator of future results and, in general, the Company's financial
results will vary from development to development, and from fiscal quarter to
fiscal quarter.

     Certain of the Company's currently planned projects, as well as future
projects, are anticipated to be longer term in nature than those developed in
the past by the Company.  The increased length of such projects further exposes
the Company to the risks inherent in the homebuilding industry, including
reductions in the value of land inventory.

     The Company's recent expansion to markets in the mainland United States
further exposes the Company to risks inherent in those markets.  For example, as
a result of the Company's acquisition of Melody, it will encounter construction
issues and risks such as expansive soils and extreme seasonal weather conditions
(dissimilar to those encountered in Hawaii).

     The Company will continue to consider its expansion into additional
selected residential housing markets in the United States mainland and into
certain foreign countries and into other related industries.  The Company has
and would consider the acquisition of or joint venture with an existing company,
as well as its own acquisition and development of homebuilding projects in
certain areas, in order to facilitate its expansion.  No assurances can be given
that the Company will be able to successfully establish operations outside of
its existing Hawaiian markets or that such expansion will not adversely affect
its results of operations.

BACKLOG

     The Company's homes are generally offered for sale in advance of their
construction upon applicable regulatory approval and sold pursuant to standard
sales contracts.  The Company's standard sales contract may be canceled by the
buyer at any time prior to closing.  The Company does not recognize revenues on
homes covered by such contracts until the sales are closed.  Homes covered by
such sales contracts are considered by the Company as its backlog.

     The following table sets forth the Company's backlog for both homes and
residential lots at March 31, 1998 and 1997, which includes homes and lots sold
pursuant to the Company's "zero-down" sales program and 100% of the backlog
related to projects developed by the Company's joint ventures in Hawaii and
Washington.


                                          13
<PAGE>

<TABLE>
<CAPTION>
                                     March 31, 1998         March 31, 1997
                                     --------------         --------------
                                             Aggregate             Aggregate
                                   Number   Sales Value   Number  Sales Value
                                   ------   -----------   ------  -----------
<S>                                <C>      <C>           <C>     <C>
Consolidated:
  Colorado                           340   $ 53,084,000    361    $53,701,000
  Hawaii                              85     24,970,000     96     23,755,000
  Northern California                 21      2,995,000    ---            ---
  Oregon                              22      4,319,000    ---            ---
                                     ---   ------------    ---    -----------
    Total Consolidated               468     85,368,000    457     77,456,000
Unconsolidated Joint Ventures:
  Hawaii                               5        585,000     11      1,413,000
  Washington                          80     19,564,000    ---            ---
                                     ---   ------------    ---    -----------

     Total                           553   $105,517,000    468    $78,869,000
                                     ---   ------------    ---    -----------
                                     ---   ------------    ---    -----------
</TABLE>

     The average sales prices of the homes and lots comprising backlog for
consolidated projects at March 31, 1998 and 1997 were $182,000 and $169,000,
respectively. Due to the ability of buyers to cancel their sales contracts, no
assurances can be given that homes or residential lots in backlog will result in
actual closings.

LIQUIDITY AND CAPITAL RESOURCES

     The Company uses it liquidity and capital resources to, among other things,
(i) support its operations including its inventories of homes, home sites and
land; (ii) provide working capital; (iii) fund market expansion, including
acquisitions, investments in and advances to joint ventures, and start-up
operations; and (iv) make interest payments on outstanding debt.

CAPITAL RESOURCES

     The Company anticipates continuing to acquire land for use in its future
homebuilding operations including finished lots and partially developed land.
The Company currently intends to acquire a portion of the land inventories
required in future periods through takedowns of lots subject to option contracts
entered into in prior periods and under new option contracts.  The use of option
contracts lessens the Company's land-related risk and improves liquidity.
Because of increased demand for partially developed and finished lots in certain
of the markets where the Company builds homes, the Company's ability to acquire
lots using option contracts has been reduced or has become more expensive.

     In connection with the purchase of its 49% interest in Stafford, the
Company entered into an agreement to make loans available to Stafford in an
aggregate principal amount of up to $5.0 million (of which $1.5 million was
outstanding on March 31, 1998).  In addition, the Company has an option to
purchase the remaining 51% interest in Stafford based on a pre-determined
formula, subject to certain contingencies.  If the Company acquired a majority
interest in Stafford, which may occur as early as January 1999, the Company may
refinance or assume Stafford's existing debt.  As of  March 31, 1998, Stafford's
total assets were approximately $35.3 million and notes payable were
approximately $24.1 million, of which $1.5 million was outstanding to the
Company.

     The Company anticipates that it has adequate financial resources to satisfy
its current and near-term capital requirements based on its current capital
resources and additional liquidity available under existing credit agreements.
The Company believes that it can meet its long-term capital needs (including,
among other things, meeting future debt payments and refinancing or paying off
other long-term debt as it becomes due) from operations and external financing
sources, assuming that no significant adverse changes in the Company's business,
or general economic conditions, occur as a result of the various risk factors
described elsewhere herein and in the Company's Annual Report on Form 10-K, in
particular, increases in interest rates.


                                          14
<PAGE>

LINES OF CREDIT AND NOTES PAYABLE

     In March 1997, the Company amended its Revolving Credit Facility,
increasing the amount of the Revolving Credit Facility from $110.0 million to
$137.6 million.  The Revolving Credit Facility expires on July 1, 1999 and
includes an option for the lenders to extend the term for an additional year.
The Revolving Credit Facility contains covenants, including certain financial
covenants and also contains provisions which may, in certain circumstances,
limit the amount the Company may borrow.  At April 30, 1998 and March 31, 1998,
the Company had bank notes payable of approximately $110.8 million and $98.4
million, respectively.

     On May 6, 1998, the Company consummated its offering of $100 million
aggregate principal amount of 9% Senior Notes, which are due April 15, 2008.
The Company received net proceeds from the offering of approximately $97.3
million (net of discounts and estimated offering costs of approximately $2.7
million).  The Company used such proceeds to repay a portion of the Company's
borrowings under its line of credit.  The offering costs will be amortized over
the term of the notes using the interest method.  In April 1998, the Company
amended certain provisions of its Revolving Credit Facility to provide for the
issuance of the Senior Notes.

     At April 30, 1998, the Company has a commitment to purchase a parcel of
land for approximately $2.2 million. The Company expects to utilize a
combination of cash flow from operations and bank financing to purchase the land
parcel.  The Company intends to consummate the purchase of the land parcel in
1998.  However, no assurances can be given that the purchase will be completed.

     The Company has no material off-balance sheet financing arrangements that
would tend to affect future liquidity.  The Company believes that cash flow from
operations and borrowings under its credit facilities will provide adequate cash
to fund the Company's operations at least through 1998.  However, there can be
no assurance that the Company will not require additional financing within this
time frame.  The Company may need to raise additional funds in order to support
more rapid expansion, respond to competitive pressures, acquire complementary
businesses or respond to unanticipated requirements.  The Company may seek to
raise additional funds through private or public sales of debt or equity
securities, bank debt, or otherwise.  There can be no assurance that such
additional funding, if needed, will be available on terms attractive to the
Company, or at all.


                                          15
<PAGE>

                                 SCHULER HOMES, INC.

                             PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

     In April 1996, the Company was served with a purported class action
     complaint by owners of units and the Association of Owners of Fairway
     Village at Waikele alleging, among other things, material construction
     defects and deficiencies, misrepresentations regarding the cost of
     insurance and breach of a covenant of good faith and fair dealing.  The
     complaint does not specify an amount of damages, but includes a claim for
     punitive damages.  Although this litigation is at an early stage of
     discovery, based on its current understanding of the lawsuit, the Company
     believes the claims to be largely without merit and that potential third
     party defendants and insurance coverage exist to offset a material portion
     of any damages from the alleged claims.  The Court has denied the motion to
     certify the class and the litigation continues to be vigorously defended.
     A court date has been set for April 1999. If this lawsuit were decided
     adversely to the Company in all material respects, it could have a material
     adverse effect on the Company's business, financial condition and results
     of operations.

     The Company is also from time to time involved in routine litigation or
     threatened litigation arising in the ordinary course of its business.  Such
     matters, if decided adversely to the Company, would not, in the opinion of
     management,  have a material adverse effect on the financial condition of
     the Company.

Items 2 through 5.  Not applicable.

Item 6.  Exhibits and Reports on Form 8-K.

(a)  Exhibits.

<TABLE>
<CAPTION>

     Exhibit
     Number              Document Description
     ------              --------------------
     <S>                 <C>
     4.4                 Indenture between the Company and U.S. Trust Company of
                         California, N.A., as Trustee, dated as of May 6, 1998.

     4.5                 Form of Senior Notes (included in Exhibit 4.4).

     10.1                Second Amendment to Loan Documents between the Company,
                         certain Banks, First Hawaiian Bank and Bank of America
                         NT & SA, dated April 29, 1998.

     10.2                Guaranty between the Company, certain Banks, First
                         Hawaiian Bank and Bank of America NT & SA, dated April
                         29, 1998.

     10.3                Release of Negative Pledge Agreement between the
                         Company, certain Banks, First Hawaiian Bank, dated
                         April 29, 1998.

     27                  Financial Data Schedule.
</TABLE>

(b)  Reports on Form 8-K.  Current reports on Form 8-K dated April 16, 1998 and
     May 6, 1998.


                                          16
<PAGE>

                                 SCHULER HOMES, INC.

                                      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 thereto duly authorized.



                                        SCHULER HOMES, INC.



Date:  May 11, 1998                        By:  /s/ James K. Schuler
                                               ----------------------------
                                                James K. Schuler
                                                Chairman of the Board,
                                                President and Chief Executive
                                                Officer
                                                (principal executive officer)



Date:  May 11, 1998                         By:  /s/ Pamela S. Jones
                                               ----------------------------
                                                Pamela S. Jones
                                                Senior Vice President of
                                                Finance, Chief Financial
                                                Officer and Director (principal
                                                financial officer)



Date:  May 11, 1998                          By:  /s/ Douglas M. Tonokawa
                                               ----------------------------
                                                Douglas M. Tonokawa
                                                Vice President of Finance,
                                                Chief Accounting Officer
                                               (principal accounting officer)


                                          17