U.S. SECURITIES AND EXCHANGE COMMISSION

                         Washington, DC  20549

                              FORM 10-QSB

(Mark One)

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

     For the quarterly period ended       MARCH 31, 1998
                                    ------------------------

   [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

     For the transition period from _____________ to ______________

                Commission file number      0 - 7 0 9 3
                                        ------------------

                         MOD-U-KRAF HOMES, INC.
   -----------------------------------------------------------------
                (Exact name of small business issuer as
                       specified in its charter)

             VIRGINIA                              54-0893908
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    (State or other jurisdiction                  (IRS Employer
  of incorporation or organization)            Identification No.)

             P. O. BOX 573, ROCKY MOUNT, VIRGINIA    24151
   ------------------------------------------------------------------
                (Address of principal executive offices)

                             (540) 483-0291
   ------------------------------------------------------------------
                      (Issuer's telephone number)


   ------------------------------------------------------------------
          (Former name, former address and former fiscal year,
                     if changed since last report)

     Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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 _____


                  APPLICABLE ONLY TO CORPORATE ISSUERS

     State the  number of  shares  outstanding of  each of the  issuer's
classes of common equity, as of the latest practicable date:   825,649
                                                             ----------

<PAGE>
                                   1

                         MOD-U-KRAF HOMES, INC.

                                 INDEX


                     PART I - FINANCIAL INFORMATION

    Balance Sheets                                        2 

    Statements of Income                                  3

    Statements of Cash Flows                              4

    Management's Discussion and Analysis                  5

    Notes to Financial Information                        6

                      PART II - OTHER INFORMATION

    Item 4.  Submission of Matters to a Vote of
                  Security Holders                        7

<PAGE>
                                   2                   
                    
                         MOD-U-KRAF HOMES, INC.        
                      Consolidated Balance Sheets      
                        March 31, 1998 and 1997        
                    
          ASSETS                                  1998       1997
                                              ----------  ----------
CURRENT ASSETS                
  Cash and cash equivalents                   $  293,774  $  270,851
  Certificates of deposit                            -       200,000
  Receivables                                    420,312      74,698
  Cost and estimated earnings in excess
    of billings on uncompleted contracts         438,488         -  
  Inventories (Note 2)                         2,280,149   3,096,886
  Notes receivable, current portion (Note 3)     614,172     926,442
  Prepaid expenses                                42,492      70,585
  Income taxes receivable                         37,469      50,528
  Deferred income taxes, current portion             -        45,909
                                              ----------  ----------
    Total current assets                       4,126,856   4,735,899
                    
LONG-TERM NOTES RECEIVABLE (Note 3)              175,118     191,338
               
PROPERTY AND EQUIPMENT, at cost less              
  accumulated depreciation                   
  1998 $2,625,677; 1997 $2,168,963. (Note 4)   3,867,511   3,986,965
                    
OTHER ASSETS                  
  Deferred income taxes                          460,788     443,287
  Cash surrender value of life insurance         139,966     117,741
  Reimbursement Account (Note 6)                 199,786     192,219
  Earnings on unused Bond proceeds               115,730     107,395
  Bond Issue Costs (Note 6)                       68,360      72,320
  Model homes                                    280,352         -   
                                              ----------  ----------
                                              $9,434,467  $9,847,164
                                              ==========  ==========
         LIABILITIES AND STOCKHOLDERS' EQUITY                    
                    
CURRENT LIABILITIES                
  Current portion of post-retirement (Note 5)     73,714      68,411
  Current maturities of long-term debt(Note 6)   150,000     150,000
  Line of credit                                 400,000         -  
  Accounts payable and other liabilities         258,922     911,097
  Accrued compensation                           243,661     260,034
  Customer deposits                              163,953     142,890
                                              ----------  ----------
          Total current liabilities            1,290,250   1,532,432
                    
LONG-TERM POST RETIREMENT BENEFITS (Note 5)      984,177   1,057,025
LONG-TERM DEBT (Note 6)                        2,489,755   2,639,755
                                              ----------  ----------
          Total liabilities                    4,764,182   5,229,212
                                              ----------  ----------
STOCKHOLDERS' EQUITY                    
  Common stock, $1 par value, 2,000,000                     
    shares authorized: shares issued and                    
    outstanding 1998 825,649, 1997 825,649       825,649     825,649
  Additional Paid in Capital                     459,671     459,671
  Retained earnings                            3,384,965   3,332,632
                                              ----------  ----------
                                               4,670,285   4,617,952
                                              ----------  ----------
                                              $9,434,467  $9,847,164
                                              ==========  ==========
Accompanying notes are an important part of these financial statements.

<PAGE>
                                   3                   
                    
                        MOD-U-KRAF HOMES, INC.              
                   Consolidated Statement of Income         
            Quarters Ended March 31, 1998 and March 31, 1997     
                    
                    
                                                 1998        1997
                                              ----------  ----------
Net Sales                                     $2,341,651  $3,193,098
  Cost of Sales                                1,824,607   2,570,577
                                              ----------  ----------
                                                 517,044     622,521
Selling, General and Administrative Expenses     577,515     624,782 
                                              ----------  ----------
  Income/<Loss> from Operations                  (60,471)     (2,261)

Deferred Compensation Expense                     19,909      21,183
Post Retirement Benefits Expense                   2,817     (2,571)
                    
Non-operating Income/<Expenses>                    4,257     (3,956)
                                              ----------  ----------

  Income/<Loss> Before Income Taxes              (78,940)    (24,829)

Federal and State Income Taxes                   (31,411)     (6,575)
                                              ----------  ----------

    Net Income / <Loss>                          (47,529)    (18,254)
                                              ==========  ==========

Earnings per share:                
            Net Income / <Loss>                    (0.06)      (0.02)
                                              ==========  ==========

Depreciation Included in Above Cost              125,260     100,372
                                              ==========  ==========

Accompanying notes are an important part of these financial statements.

<PAGE>
                                    4                  
                    
                         MOD-U-KRAF HOMES, INC.        
                  Consolidated Statement of Cash Flows      
                 Quarters Ended March 31, 1998 and 1997          
                    
                                                 1998        1997
OPERATING ACTIVITIES                          ----------  ----------
  Net Income/<Loss>                           $  (47,529) $  (18,254)
  Noncash <income> expenses included                   
      in income or <loss>:                   
    Depreciation and amortization                125,260     100,372
    Deferred income taxes                          3,485      (3,507)
    Loss (gain) on sale of equipment                 -        (1,416)
    Increase in cash value of life insurance      (2,088)     (1,514)
    Adjustments to post retirement benefits      (17,416)    (21,750)
  <Increase> decrease in:                    
    Trade receivables                           (274,868)    (21,771)
    Cost and estimated earnings in excess 
      of billings on uncompleted contracts      (392,480)        -
    Inventories                                  (27,086)   (738,540)
    Prepaid Expenses                               2,394      (4,645)
    Model placement costs                        (44,335)        -  
    Income taxes receivable                      (37,469)        -
  <Decrease> increase in:                    
    Accounts payable and other Liabilities      (107,388)    387,001
    Accrued compensation                          82,149      57,780
    Customer deposits                             80,266    (150,765)
    Income taxes payable                          (5,847)     (4,405)
                                              ----------  ----------
  Net cash provided by (used in)                  
      operations                                (662,952)   (421,414)
                                              ----------  ----------
INVESTING ACTIVITIES                     
  Proceeds from sale of equipment                    -        (2,012)
  Purchase of property & equipment net of                   
     debt incurred 1998 $0 ;1997 $0.             (16,465)   (196,835)
  <Increase> decrease in notes receivable                   
     arising from sales                           48,640    (128,153)
                                              ----------  ----------
  Net cash provided by (used in)                  
     investing activities                         32,175    (327,000)
                                              ----------  ----------
FINANCING ACTIVITIES                     
  Short-term borrowings                          400,000         -
  Cash dividends paid                            (24,769)    (18,254)
  Debt issue costs, net of debt incurred                    
    1998 $0 : 1997 $0.                               990         990
  Funding of reimbursement account               (39,544)    (39,512)
  Earnings on unused bond proceeds                (2,118)     (1,992)
                                              ----------  ----------
  Net cash provided by (used in)                  
     financing activities                        334,559     (58,768)
                                              ----------  ----------
    Net increase (decrease) in cash             (296,218)   (807,182)
CASH                 
  Beginning                                      589,992   1,078,033
                                              ----------  ----------
  Ending                                      $  293,774  $  270,851
                                              ==========  ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION      
  Cash payments for:                    
    Interest                                  $   26,253  $   27,074 
    Income taxes                              $      -    $      -

Accompanying notes are an important part of these financial statements.

<PAGE>
                                   5                   
                    
                        MOD-U-KRAF HOMES, INC                    
                    
                  Management's Discussion and Analysis           
                    of the First Quarter Statements              
                    
                    
    Net sales for the first quarter of 1998 were $2,341,650  as compared
to $3,193,098 for the first quarter of 1997, a 26.67% decrease.  Due to
the extremely wet winter, the Company ended the quarter with 37 units in
inventory; a retail value of $1,585,000. Our builders could not complete
foundations or find enough dry days to set their homes.  Although this 
situation is not unusual for a first quarter, it has been compounded by
untimely and record rain fall.
    Cost of Sales was  77.92% of net sales for the first quarter of 1998
and  80.50% for the first quarter of 1997.  Gross profit was  22.08% for
the first quarter of 1998 and 19.50% for the first quarter of 1997.
    Selling, General and Administrative expenses was 24.66% of net sales
for the first quarter of 1998 and  19.57% for the first quarter of 1997.
     We had a net loss for the first quarter 1998 of $47,529 compared to
a net loss of  $18,254 for the first quarter of 1997.   This is  <$0.06>
per share for the  first quarter of 1998  and  <$0.02> per share for the
same period in 1997.
     The only change in liquidity and capital resources is the $400,000
draw on our line of credit to assist us with our short-term monetary needs 
until the weather allows us to set the houses we have in inventory.
Production is still suspended at the Highway 40 facilty because of the 
delivery backlog.  The Company continues production at its new facility.
Management does not believe that the suspension will have a material effect
on the company's results of operations for 1998, although recognition of 
income may be delayed from quarter to quarter.
     The Company started a turnkey division a few years ago, which would 
give individual Mod-U-Kraf Homes customers the option to have the Company
finish the entire project at the job site.  In the past individual 
customers would have to hire a contractor to dig out the basement, pour
the foundation, dig the well, put in a driveway, put the siding on the 
house, etc to finish zipping up the house once it is set on the foundation.  
Initially this was an immaterial part of our business and did not require
any special accounting procedures.  Over the past three months the Company's
Turnkey division has become a material source of revenue because of the 
increased number of turnkey contracts in progress at the end of the quarter.
As a result, management has elected to recognize revenue from fixed-price
and modified fixed-price construction contracts on the percentage-of-
completion method, measured by the cost to cost method.  This is reflected
on the Balance Sheet in "Costs and estimated earnings in excess of 
billings on uncompleted contracts", which represents revenues recognized
in excess of amounts billed.
<PAGE>
                                   6                   
                    
                         MOD-U-KRAF HOMES, INC.                  
                    NOTES TO FINANCIAL INFORMATION               
                    
1.  The financial information furnished herein is not certified, but re-   
    flects all adjustments,  consisting only of normal recurring adjust-
    ments which are,  in the opinion of management,  necessary to a fair   
    statement of the results for the quarter ended March 31, 1998.   The   
    results for the quarter ended March 31, 1998 are not necessarily in-   
    dicative of results to be expected for the entire year.  The housing
    industry is seasonal  in nature and  revenues to the  Company during   
    the period April 1 to September 30 are normally greater than revenues
    during the balance of the year.                    
                    
    Both  primary & fully  diluted net income per common share are based   
    on the weighted average number of shares of common stock outstanding
    during each year and common stock equivalents of dilutive stock 
    options.                  
                    
2.  Revenue and cost recognition
    Revenues from fixed-price and modified fixed-price construction
    contracts are recognized on the percentage-of-completion method,
    measured by the cost-to-cost method. Revenues from cost-plus
    contracts are recognized on the basis of costs incurred during the
    period plus the fee earned.

    Contract costs include all direct material and labor costs. General,
    administrative, and indirect costs are charged to expense as incurred.
    Provisions for estimated losses on uncompleted contracts are made
    in the period in which such losses are determined. Changes in job
    performance, job conditions, and estimated profitability are 
    recognized in the period in which the revisions are determined.

    The asset, "Costs and estimated earnings in excess of billings on
    uncompleted contracts," represents revenues recognized in excess
    of amounts billed.    

3.  Cost and estimated earnings on uncompleted contracts
                                                       1998         1997
                                                       ----         ----
    Costs incurred on uncompleted contracts           750,858         -
    Estimated earings                                 332,574         -
                                                      -------      -------
                                                    1,083,432         -
    Less billings to date                             644,944         -
                                                    ---------      -------
    Costs and estimated earnings in excess
      of billings on uncompleted contracts            438,488         -
                                                    =========      =======
   
4.  Inventories                    
    The components of inventories are as follows       1998         1997   
                                                       ----         ----
    Raw Materials                                     680,736    1,143,319
    Work-In-Progress                                  148,434      337,932
    Finished Goods                                  1,035,121    1,336,558
    Land and Units held for sale                      415,858      279,077
                                                  -----------  -----------
                                                    2,280,149    3,096,886
                                                  ===========  ===========
5.  Notes Receivable                                   1998         1997
                                                       ----         ----
    Various mortgage notes receivable secured by                 
     deeds of trust                                   164,172      168,544
    Various construction loans(all current)           599,780      911,928
    Demand note receivable with interest payable                 
     quarterly at 9%, unsecured                         6,425       10,175
    Life insurance note receivable from an                  
     officer of the Company(non-interest bearing)       2,038        4,633
    Note receivable from the President, payable                  
     in annual principal installments of$5,625                   
     interest at 5.03%                                 16,875       22,500
                                                  -----------  -----------
                                                      789,290    1,117,780
        Less current portion                          614,172      926,442
                                                  -----------  -----------
                                                      175,118      191,338
                                                  ===========  ===========
6.  Property and Equipment                             1998         1997
                                                       ----         ----
    Land and improvements                             775,724      773,539
    Buildings                                       2,883,912    2,942,338
    Manufacturing equipment                         2,199,272    1,919,371
    Other furniture, fixtures and equipment           634,280      520,680
                                                  -----------  -----------
                                                    6,493,188    6,155,928
        Less accumulated depreciation              (2,625,677)  (2,168,963)
                                                  -----------  -----------
                                                    3,867,511    3,986,965
                                                  ===========  ===========
                    
7.  Deferred Compensation, Related Parties             1998         1997
                                                       ----         ----
    Present Value of deferred compensation                  
    benefits payable  to the widow of O.Z. Oliver                
    at $6,311 monthly until the earlier of her                   
    death or Sept. 2006, discounted at 8.50% in                  
    1995 and 1994.                                    457,229      492,448

    Present Value of deferred compensation                  
    benefits payable to Robert K. Fitts at $5,560                
    monthly until his death after which the                 
    benefits are payable to his spouse until the                 
    earlier of her death or July 2007, discounted                
    at 8.50% in 1995 and 1994.                        469,176      494,823

    Present value of estimated post-retirement                   
    benefits other than pensions discounted at                   
    8.50%                                             131,486      138,165
                                                  -----------  -----------
                                                    1,057,891    1,125,436
        Less Current Maturities                        73,714       68,411
                                                  -----------  -----------
                                                      984,177    1,057,025
                                                  ===========  ===========
                    
8.  Long-Term Debt                 
                    
    On July 12, 1995, the IDA of Franklin County, VA issued bonds in the   
    amount of  $3,000,000 to finance the construction of a manufacturing
    facility.   The Series 1995 Variable  Rate Demand Industrial Revenue
    Bonds are secured by the Company's Irrevocable Letter of Credit with   
    Crestar Bank. The letter of credit agreement subjects the Company to   
    certain financial and operating covenants,  all of which the Company
    was in compliance with at year end.  Crestar Bank holds a first lien   
    and  security interest on  the facility.   The bonds are  payable in   
    annual principal amounts of $150,000 through 2015. The interest rate   
    was 3.80% at March 31, 1998.                  
                    
    The  Company has  entered an  agreement  of  sale  to  purchase  the   
    facility from the IDA.  The Company's obligation under the Agreement
    of Sale is equal to the required principal and  interest payments on   
    the bonds and is payable in monthly installments currently estimated
    at $22,000.  The monthly payments are deposited into a Reimbursement
    Account with  Crestar Bank and used to pay all  principal,  interest
    and fees related to the Bonds.   The Company also agreed to maintain
    an additional required deposit in the reimbursement account equal to   
    55 days of interest at 15.0% on the bonds. As of March 31, 1998, the   
    Reimbursement Account balance was as follows:                

         Required prepaid interest deposit      $ 67,810
         Unused monthly principal deposits       112,500
         Earnings                                 19,476
                                             -----------              
                                                $199,786
                    
    The Company's policy is to reflect the  balance of the reimbursement
    account  as an asset  until the  funds are  used by the  trustee for   
    payment of bond obligations,  at which time the  Company reduces its   
    obligations under the asset sale agreement.                  
                    
    As of  March 31, 1998,  $2,939,755  of the  bond proceeds  have been   
    drawn from the trustee.   The  Company's obligation  under the asset   
    sale agreement is reflected at the amount of bond proceeds that have   
    been drawn.   Any unused proceeds will be used for  early retirement
    of bonds.                 
                    
    Amounts earned on bond proceeds prior to their being drawn from the    
    trustee  are to be  applied to  principal reduction  in the future.  
    These earnings amounted to $115,730 at March 31, 1998.       
                    
    Debt issue costs will be amortized over the life of the bonds.
                    
9.  The Board Of Directors of Mod-U-Kraf Homes, Inc. on  May 6, 1998 de-   
    clared a  $.03 per share  cash dividend on all shares outstanding on   
    May 22, 1998 and to be paid on June 12, 1998.                 
                    
10.  The Company uses the annualized method in its computation of Federal
    Income Taxes.                  
                    
11.  Revenues are recorded when the houses are  delivered for  sales made   
    on account.  Cash sales paid in advance are recorded when produced.


<PAGE>
                                   7                   

                          MOD-U-KRAF HOMES, INC.                 

                            OTHER INFORMATION                    


Item 4.  Submission of Matters to a Vote of Security Holders     
         ---------------------------------------------------     
         Mod-U-Kraf Homes, Inc.  held its annual meeting of shareholders
         on March 25, 1998   The following were elected to the Board of
         Directors: Dale H. Powell, Edwin J. Campbell, W. Curtis Carter,
         Bobbie L. Oliver and Mary L. Fitts.  Following the meeting the
         following were elected officers: Dale H Powell, President,
         Edwin J Campbell, Vice President,  Jeffrey D Powell, Treasurer,
         and Steven T. Montgomery, Controller.         


<PAGE>
                                  8

                         MOD-U-KRAF 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 thereunto duly authorized.


                                      MOD-U-KRAF HOMES, INC.
                                ----------------------------------
                                          (Registrant)


Date: May 13, 1998


                                ----------------------------------
                                           Dale H. Powell
                                President and Chairman of the Board


                                ----------------------------------
                                        Steven T. Montgomery
                                             Controller