<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 June 30, 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>
        <S>                                                 <C>
                                                            Outstanding at
        Class of Common Stock                               July 31, 1998
        ---------------------                               -------------
           $.01 par value                                     20,107,450
</TABLE>



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

                                      INDEX


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

Item 1.   Financial Statements

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

          Consolidated Balance Sheets - June 30, 1998 and
             December 31, 1997........................................   4

          Consolidated Statements of Income - Three and six months
             ended June 30, 1998 and 1997.............................   5

          Consolidated Statements of Cash Flows - Six
             months ended June 30, 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...........................................  17

SIGNATURES............................................................  19
</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 June 30, 1998, and the related consolidated
statements of income for the three-month and six-month periods ended June 30,
1998 and 1997, and the consolidated statements of cash flows for the
six-month periods ended June 30, 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
August 10, 1998


                                     3

<PAGE>


                              SCHULER HOMES, INC.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                       June 30,1998       December 31, 1997
                                                                                       ------------       -----------------
                                                                                       (unaudited)
 <S>                                                                                 <C>                  <C>
 ASSETS
 Cash and cash equivalents (restricted-Note 2)...................................    $     5,182,000       $    3,842,000
 Receivables.....................................................................          1,029,000              880,000
 Prepaid income taxes............................................................          1,036,000            1,682,000
 Real estate inventories (Note 3)................................................        311,930,000          291,081,000
 Investments in unconsolidated joint ventures....................................         19,313,000           16,026,000
 Deposits........................................................................          3,504,000            1,691,000
 Deferred offering costs, net (Note 9)...........................................          2,147,000            1,171,000
 Notes receivable (Note 2).......................................................          2,584,000            2,406,000
 Deferred income taxes...........................................................          4,106,000            4,002,000
 Intangibles, net................................................................         13,380,000           13,742,000
 Other assets....................................................................          3,402,000            4,048,000
                                                                                           ---------            ---------

 Total assets....................................................................     $  367,613,000       $  340,571,000
                                                                                      --------------       --------------
                                                                                      --------------       --------------

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Accounts payable................................................................         14,463,000       $   12,805,000
 Accrued expenses................................................................         14,706,000           13,207,000
 Notes payable to bank (Note 4)..................................................         13,350,000           91,077,000
 Notes payable to others.........................................................            918,000            2,627,000
 6-1/2% convertible subordinated debentures due 2003.............................         57,500,000           57,500,000
 9% senior notes due 2008 (Note 9)...............................................         98,432,000                  ---
                                                                                          ----------           ----------

 Total liabilities...............................................................        199,369,000          177,216,000

 Commitments and contingencies (Notes 4 and 8)

 Stockholders' equity:
    Common stock, $.01 par value; 30,000,000 shares authorized;  20,881,044
      and 20,874,927 shares issued at June 30, 1998 and December 31, 1997,
      respectively...............................................................            209,000              209,000
    Additional paid-in capital...................................................         93,136,000           93,100,000
    Retained earnings............................................................         79,899,000           75,046,000
    Treasury stock, at cost; 774,000 shares at June 30, 1998 and
      December 31, 1997..........................................................         (5,000,000)          (5,000,000)
                                                                                          -----------          -----------

 Total stockholders' equity......................................................        168,244,000          163,355,000
                                                                                         -----------          -----------

 Total liabilities and stockholders' equity......................................     $  367,613,000       $  340,571,000
                                                                                      --------------       --------------
                                                                                      --------------       --------------
</TABLE>


                             See accompanying notes.


                                        4
<PAGE>


                              SCHULER HOMES, INC.
                       CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                             Three months ended June 30,            Six months ended June 30,
                                                             ---------------------------            -------------------------
                                                               1998               1997                1998               1997
                                                               ----               ----                ----               ----
                                                                    (unaudited)                             (unaudited)
 <S>                                                     <C>                 <C>                 <C>                <C>
 Residential real estate sales.....................      $  67,433,000       $  52,457,000       $ 122,945,000      $ 102,452,000

 Costs and expenses:
    Residential real estate sales..................         53,971,000          42,021,000          97,858,000         83,485,000
    Selling and commissions........................          4,672,000           4,303,000           8,592,000          7,766,000
    General and administrative.....................          3,750,000           3,379,000           7,520,000          6,299,000
                                                         -------------       -------------       -------------      -------------
       Total costs and expenses....................         62,393,000          49,703,000         113,970,000         97,550,000

 Income from unconsolidated joint ventures.........            438,000               9,000             796,000             16,000
                                                         -------------       -------------       -------------      -------------

    Operating income ..............................          5,478,000           2,763,000           9,771,000          4,918,000
 Other income (expense)............................           (838,000)           (898,000)         (1,874,000)        (1,797,000)
                                                         -------------       -------------       -------------      -------------

    Income before provision for income taxes.......          4,640,000           1,865,000           7,897,000          3,121,000
 Provision for income taxes (Note 6)...............          1,788,000             706,000           3,044,000          1,185,000
                                                         -------------       -------------       -------------      -------------

    Net income ....................................      $   2,852,000       $   1,159,000       $   4,853,000      $   1,936,000
                                                         -------------       -------------       -------------      -------------
                                                         -------------       -------------       -------------      -------------

 Net income per share (Note 7):
    Basic and diluted..............................      $        0.14       $        0.06       $        0.24      $        0.10
                                                         -------------       -------------       -------------      -------------
                                                         -------------       -------------       -------------      -------------
</TABLE>


                            See accompanying notes.


                                     5
<PAGE>


                              SCHULER HOMES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                          Six months ended June 30,
                                                                                          -------------------------
                                                                                            1998               1997
                                                                                            ----               ----
                                                                                                  (unaudited)
 <S>                                                                                  <C>                  <C>

 OPERATING ACTIVITIES:
 Net income .....................................................................     $    4,853,000       $   1,936,000
 Adjustments to reconcile net income to net cash provided by (used in)
    operating activities:
      Depreciation and amortization expense......................................          1,545,000             573,000
      (Income) loss from unconsolidated joint ventures...........................           (707,000)              7,000
      Sales financed by Company .................................................                ---            (262,000)
      Principal payments of notes receivable.....................................            121,000           1,615,000
 Changes in assets and liabilities, net of effects from purchase of Melody
   Homes and Mortgage:
        (Increase) decrease in receivables.......................................           (149,000)            619,000
        (Increase) decrease in prepaid income taxes..............................            646,000            (206,000)
        (Increase) decrease in real estate inventories...........................        (21,737,000)        (13,860,000)
        (Increase) decrease in deposits..........................................         (1,813,000)            283,000
        (Increase) decrease in other assets......................................            506,000          (1,032,000)
        Increase (decrease) in accounts payable..................................          1,658,000          (3,004,000)
        Increase (decrease) in accrued expenses..................................          1,200,000           2,344,000
        Change in deferred income taxes..........................................           (104,000)          2,121,000
                                                                                      --------------       -------------
          Net cash provided by (used in) operating activities....................        (13,981,000)         (8,866,000)

 INVESTING ACTIVITIES:
 Payment for purchase of Melody Homes and Mortgage, net of cash acquired.........                ---         (29,508,000)
 Advances to unconsolidated joint ventures.......................................         (5,109,000)           (122,000)
 Repayments of advances to unconsolidated joint ventures.........................             59,000              70,000
 Capital distributions from unconsolidated joint ventures........................          2,470,000                 ---
 Purchase of furniture, fixtures, and equipment..................................           (155,000)           (344,000)
                                                                                      --------------       -------------
          Net cash provided by (used in) investing activities....................         (2,735,000)        (29,904,000)

 FINANCING ACTIVITIES:
 Proceeds from bank borrowings...................................................        163,371,000         105,191,000
 Principal payments on bank borrowings...........................................       (241,098,000)        (67,648,000)
 Principal payments on notes payable to others...................................         (1,709,000)                ---
 Net (increase) decrease in deferred offering costs..............................           (976,000)            114,000
 Proceeds from issuance of senior notes, net of discount.........................         98,408,000                 ---
 Net decrease in discount on issuance of senior notes............................             24,000                 ---
 Proceeds from issuance of common stock from exercise of stock options...........             36,000                 ---
                                                                                      --------------       -------------
          Net cash provided by (used in) financing activities....................         18,056,000          37,657,000
                                                                                      --------------       -------------

 Increase (decrease) in cash.....................................................          1,340,000          (1,113,000)
 Cash and cash equivalents (restricted) at beginning of period...................          3,842,000           1,619,000
                                                                                      --------------       -------------
 Cash and cash equivalents (restricted) at end of period.........................     $    5,182,000       $     506,000
                                                                                      --------------       -------------
                                                                                      --------------       -------------
</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 accompanying unaudited consolidated financial
    statements 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 homebuyers 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 June 30, 1998 consist of the following:

<TABLE>
       <S>                                                      <C>
       Unimproved land held for future development...........   $  37,567,000
       Development projects in progress......................     236,825,000
       Completed inventory (including lots held for sale)....      37,538,000
                                                                -------------
                                                                $ 311,930,000
                                                                -------------
                                                                -------------
</TABLE>

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


4.  Notes Payable to Bank

    At June 30, 1998, $124,250,000 of the Company's line of credit is unused, of
    which $2,641,000 is restricted as to withdrawal for outstanding but unused
    letters of credit.

    Effective July 1, 1998, the Company reduced the amount of its Revolving
    Credit Facility, from $137,600,000 to $97,600,000.  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 June 30,
    1998, the Company's outstanding borrowings were at interest rates of
    LIBOR plus 1.75% (7.44%) 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.  In April 1998, the Company amended
    certain provisions of its Revolving Credit Facility to provide for the
    issuance of the Senior Notes (see Note 9).

    The Company paid interest (relating to notes payable to bank, notes
    payable to others and the convertible subordinated debentures) of
    approximately $1,385,000 during the quarter ended June 30, 1998.
    Interest incurred during the quarter ended June 30, 1998 totaled
    $3,378,000, of which approximately $2,764,000 was capitalized to real
    estate inventories and approximately $614,000 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 June 30, 1998 and 1997 totaled $2,281,000 and
    $1,435,000, respectively.


5.  Related Party Transactions

    From time to time, the Company engages the law firms in which directors
    of the Company are partners.  During the quarterly period ended June 30,
    1998 and 1997, legal fees of approximately $196,000 and $33,000,
    respectively, to such firms were incurred by the Company.


6.  Income Taxes

    During the three months ended June 30, 1998, the Company made income tax
    payments of $2,115,000.


7.  Net Income Per Share

    Basic net income per share for the quarter and six months ended June 30,
    1998 were computed using the weighted average number of common shares
    outstanding during the periods of 20,104,653 and 20,102,800,
    respectively. Basic net income per share for the quarter and six months
    ended June 30, 1997 were computed using the weighted average number of
    common shares outstanding during the periods of 20,100,177.


                                  8
<PAGE>


    The computation of diluted net income per share for the quarters and six
    month periods ended June 30, 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 June 30, 1998, the Company had under contract to purchase for
    approximately $3,165,000, 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.  Senior Notes

    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.  The Company
    offered to exchange its Senior Notes for new notes evidencing the same 
    debt as the Senior Notes, which were registered pursuant to Form S-4 
    Registration Statement filed with the U.S. Securities and Exchange 
    Commission on July 6, 1998.


10. Stockholders' Equity

    On July 31, 1998, the Company filed a Form S-8 Registration Statement with
    U.S. Securities and Exchange Commission to register 500,000 shares of the
    Company's common stock for issuance under the Company's Employee Stock
    Purchase Plan.


                                       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 June 30, 1998, sales of residential real estate
(revenue) were $67.4 million  and operating income was $5.5 million, compared to
revenues of $52.5 million and operating income of $2.8 million during the second
quarter of 1997.  Net income was $2.9 million ($0.14 per share) for the quarter
ended June 30, 1998, compared to net income of $1.2 million ($0.06 per share)
during the 1997 second quarter.   From the second quarter of 1997 to the second
quarter of 1998, revenues grew 28.5%, net income grew 146.1%, the number of
units closed increased from 336 to 433 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 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 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 June 30,             From
                                                    1998        1997               1997 to 1998
                                                    ----        ----               ------------
 <S>                                           <C>             <C>          <C>
 Residential real estate sales................     100.0%      100.0%                  28.5%

 Costs and expenses:
   Residential real estate sales..............      80.0        80.1                   28.4
   Selling and commissions....................       6.9         8.2                    8.6
   General and administrative.................       5.6         6.4                   11.0
                                                   -----       -----
       Total costs and expenses...............      92.5        94.7                   25.5

 Income from unconsolidated joint ventures....       0.6        ----                  4,766.7
                                                   -----       -----

   Operating income...........................       8.1         5.3                   98.3
 Other income (expense).......................      (1.2)       (1.7)                  (6.7)
                                                   -----       -----

   Income before provision for income taxes...       6.9         3.6                  148.8
 Provision for income taxes...................       2.7         1.4                  153.3
                                                   -----       -----
   Net income.................................       4.2%        2.2%                 146.1
                                                   -----       -----
                                                   -----       -----
</TABLE>


                                      10
<PAGE>

<TABLE>
<CAPTION>
                                                                              % Change in Dollar Amounts
                                                  Six months ended June 30,              From
                                                      1998        1997               1997 to 1998
                                                      ----        ----               ------------
<S>                                               <C>                         <C>
 Residential real estate sales..................     100.0%      100.0%                  20.0%

 Costs and expenses:
    Residential real estate sales...............      79.6        81.5                   17.2
    Selling and commissions.....................       7.0         7.6                   10.6
    General and administrative..................       6.1         6.1                   19.4
                                                     -----       -----
        Total costs and expenses................      92.7        95.2                   16.8

 Income from unconsolidated joint ventures......       0.6          --                  4,875.0
                                                     -----       -----

       Operating income.........................       7.9         4.8                   98.7
 Other income (expense).........................      (1.5)       (1.8)                   4.3
                                                     -----       -----

    Income before provision for income taxes....       6.4         3.0                  153.0
 Provision for income taxes.....................       2.5         1.1                  156.9
                                                     -----       -----
    Net income..................................       3.9%        1.9%                 150.7
                                                     -----       -----
                                                     -----       -----
</TABLE>

RESIDENTIAL REAL ESTATE SALES

The Company's sales of residential real estate (revenues) for the quarter ended
June 30, 1998 were approximately $67.4 million as compared to approximately
$52.5 million during the quarter ended June 30, 1997.  This represents an
increase of approximately $15.0 million or 28.5%.  The increase in revenues
reflects a larger number of unit sales closed in the second quarter of 1998
relative to the second quarter of 1997, coupled with an increase in average
sales prices. The increased number of unit closings came primarily from
increases in the Hawaii, Northern California and Oregon divisions.  The
Company's average sales price per unit closed in the "consolidated" projects
(see table below) increased to $182,000, a 12.3% increase from an average sales
price per unit of  $162,000.  The increase in the average sales price per unit
was primarily attributable to the higher average sales prices of homes in
Colorado and Hawaii during the second quarter of 1998, as compared to the second
quarter of 1997.  The increase in Hawaii is due primarily to a difference in
product mix between the periods.

The Company's sales of residential real estate (revenues) were approximately
$122.9 million for the six months ended June 30, 1998, compared to $102.5
million during the same period in 1997, an increase of 20.0%.  The increase is
attributable to the increase in the number and average sales price of unit sales
closed during the first six months of 1998 compared to the first six months of
1997.  The average sales price per unit closed was $177,000 during the six
months ended June 30, 1998, compared to $176,000 during the six months ended
June 30, 1997. 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.


                                     11
<PAGE>


    The following table sets forth the number of sales closed during the
quarters ended June 30, 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 June 30,  Six months ende June 30,
                                     1998        1997           1998         1997
                                     ----        ----           ----         ----
 <S>                            <C>              <C>         <C>             <C>
 Consolidated:
   Colorado                          243          247            485          414
   Hawaii (1)                         94           84            153          152
   Northern California                20          ---             35          ---
   Oregon                             14          ---             24          ---
                                    -----        -----          -----        -----
     Total Consolidated              371          331            697          566

 Unconsolidated Joint Ventures:
   Hawaii (2)                          7            5             10           10
   Washington (3)                     55          ---            116          ---
                                    -----        -----          -----        -----

 Total                               433          336            823          576
                                    -----        -----          -----        -----
                                    -----        -----          -----        -----
</TABLE>


(1)  Includes homes and lots sold and closed pursuant to the Company's
     "zero-down" sales program in Hawaii. The revenues associated with one
     "zero-down" closing were deferred during the first three and six months
     of 1998 until the related notes receivable are paid in full.  There were
     7 and 11 "zero-down" closings in the three and six months ended June 30,
     1997, respectively.
(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 development and project
management activities and miscellaneous construction costs.

     Cost of residential real estate sales increased from approximately $42.0
million during the quarter ended June 30, 1997 to approximately $54.0 million
during the same period in 1998, representing an increase of approximately $12.0
million or 28.4%.  This increase reflects a higher level of unit and dollar
sales closed during the second quarter of 1998 relative to the second quarter of
1997.  As a percentage of revenues, cost of residential real estate sold
decreased to 80.0% from 80.1%.  This decrease is largely attributable to higher
average selling prices and increased profit margins in the Company's Colorado
operation, offset in part by a larger component of total closings in the 1998
second quarter being derived from the divisions with lower profit margins than
the Colorado division.

   The cost of residential real estate sold increased to approximately $97.9
million during the six months ended June 30, 1998 from approximately $83.5
million during the same period in 1997, representing an increase of
approximately $14.4 million or 17.2%, primarily reflecting the larger volume of
home sales closed in 1998 as compared to 1997.


                                      12
<PAGE>


     The cost of residential real estate sold as a percentage of sales decreased
to 79.6% for the six months ended June 30, 1998 from 81.5% for the six months
ended June 30, 1997.  The decrease in the cost of residential real estate sold
as a percentage of sales reflects higher margins realized by the Colorado
division and higher 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 June 30, 1998 and 1997
was approximately $3.4 million and $3.0 million, respectively.  Of the
amounts incurred, approximately $614,000 and $706,000 was expensed currently
(included in Other Expense) in the second 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 $2.3 million and $1.4 million during the quarters ended June 30, 1998
and 1997, respectively.

     Average debt outstanding was approximately $172.0 million and $164.4
million during the second quarters of 1998 and 1997, respectively.  The
Company's average interest rate on its debt for the quarters ended June 30,
1998 and 1997 was approximately 7.9% and 7.3%, respectively.  The increase
from 7.3% to 7.9% is due primarily to the issuance of the Senior Notes at a
9% interest rate.  The Company's notes payable to banks 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

     Selling costs and commissions represented approximately 6.9% and 8.2% of
sales of residential real estate during the quarters ended June 30, 1998 and
1997, respectively.  Selling costs and commissions represented approximately
7.0% and 7.6% of sales of residential real estate during the six months ended
June 30, 1998 and 1997, respectively.  These decreases are a result of the
selling costs and commissions increasing at a lower rate than revenues.

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 $371,000 during the
second 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 decreased from 6.4% during the
quarter ended June 30, 1997 to 5.6% during the quarter ended June 30, 1998,
which is a result of general and administrative expenses increasing at a
lower rate than revenues.

     General and administrative expenses increased by $1.2 million or 19.4%
during the first half of 1998 as compared to the same periods in 1997.  As a
percentage of sales, general and administrative expense was 6.1% during both
the first half of 1998 and the first half of 1997.

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 and six 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.


                                      13
<PAGE>


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 decrease in other expense of $60,000
from the second quarter of 1997 and the increase of $77,000 from the first six
months of 1997 to the comparable periods in 1998 are primarily due to a decrease
in interest expense from the first quarter of 1998 to the second quarter of
1998.

PROVISION FOR INCOME TAXES

     The Company's effective income tax rate for the second quarters of 1998 and
1997 was approximately 38.5% and 37.9%, 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.


                                      14
<PAGE>


     The following table sets forth the Company's backlog for both homes and
residential lots at June 30, 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.

<TABLE>
<CAPTION>
                                               June 30, 1998                   June 30, 1997
                                               -------------                   -------------
                                                        Aggregate                         Aggregate
                                         Number        Sales Value        Number         Sales Value
                                         ------        -----------        ------        ------------
 <S>                                     <C>          <C>                 <C>           <C>
 Consolidated:
   Colorado                               436         $  70,674,000         383         $ 57,294,000
   Hawaii                                  76            22,715,000          93           23,623,000
   Northern California                     26             3,954,000         ---                  ---
   Oregon                                  41             8,076,000           2              345,000
                                          ---         -------------         ---         ------------
     Total Consolidated                   579           105,419,000         478           81,262,000

 Unconsolidated Joint Ventures:
   Hawaii                                   6               758,000          13            1,713,000
   Washington                              88            22,320,000         ---                   --
                                          ---         -------------         ---         ------------

     Total                                673         $ 128,497,000         491         $ 82,975,000
                                          ---         -------------         ---         ------------
                                          ---         -------------         ---         ------------
</TABLE>


     The average sales prices of the homes and lots comprising backlog for
consolidated projects at June 30, 1998 and 1997 were $182,000 and $170,000,
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 $10.0 million (increased from $5.0
million as of June 1, 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  June 30,
1998, Stafford's total assets were approximately $50.2 million and notes
payable were approximately $36.6 million, of which $6.5 million was
outstanding to the Company.


                                      15
<PAGE>


     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.

LINES OF CREDIT AND NOTES PAYABLE

     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.

     In connection with the Senior Note offering, the Company evaluated its cash
needs.  As a result, effective July 1, 1998, the Company reduced the amount of
its Revolving Credit Facility to $97.6 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 July 31,
1998 and June 30, 1998, the Company had bank notes payable of approximately
$20.2 million and $13.4 million, respectively.

     The Company is in the process of modifying certain terms of its Revolving
Credit Facility, including an extension of the expiration date and providing for
a $90 million Committed Amount and a $30 million Uncommitted Amount, of which
the Company would have a one-time option to request activation.  However, no
assurances can be given that such modifications will be completed.

     At July, 31 1998, the Company has a commitment to purchase a parcel of land
for approximately $3.2 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.


                                      16
<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 and 3.  Not applicable.

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

(a)      The Company held an Annual Meeting of Stockholders on May 18, 1998.

(b)      At the Annual Meeting of Stockholders, the following directors were
         elected:

         James K. Schuler
         Michael T. Jones

(c)      At the Annual Meeting of Stockholders, the following matters were voted
         upon:

         (1)  A proposal to ratify the selection of Ernst & Young LLP as
              independent auditors for fiscal year 1998.

              Affirmative votes:   17,429,660
              Negative votes:             500
              Abstain:                    800

         (2)  A proposal to elect James K. Schuler to the Board of Directors.
              Affirmative votes:   17,429,260
              Withhold authority:       1,700

         (3)  A proposal to elect Michael T. Jones to the Board of Directors.
              Affirmative votes:   17,423,560
              Withhold authority:       7,400

         (4)  A proposal to approve the adoption of the 1998 Employee Stock
              Purchase Plan.

              Affirmative votes:   15,894,477
              Negative votes:       1,532,283
              Abstain:                  4,200


                                      17
<PAGE>


Item 5.  Not applicable.

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

(a)      Exhibits.

<TABLE>
<CAPTION>
               Exhibit
               Number       Document Description
               -------      --------------------
               <S>          <C>
                 27         Financial Data Schedule.
</TABLE>

(b)      Reports on Form 8-K.  Current reports on Form 8-K filed April 17, 1998
         and May 7, 1998.


                                      18
<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:  August 12, 1998                 By:  /s/ James K. Schuler
                                          -------------------------------------
                                          James K. Schuler
                                          Chairman of the Board,
                                          President and Chief Executive Officer
                                          (principal executive officer)



Date:  August 12, 1998                 By:  /s/ Pamela S. Jones
                                          -------------------------------------
                                          Pamela S. Jones
                                          Senior Vice President of Finance,
                                          Chief Financial Officer and
                                          Director (principal financial officer)



Date:  August 12, 1998                 By:  /s/ Douglas M. Tonokawa
                                          -------------------------------------
                                          Douglas M. Tonokawa
                                          Vice President of Finance,
                                          Chief Accounting Officer
                                          (principal accounting officer)


                                      19