UNITED STATES
	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 period ended June 30, 1997 

	OR

[  ]  Transition report pursuant to section 13 or 15(d) of the Securities      
      Exchange Act of 1934 
      For the transaction period from_________to___________ 

	Commission file number: 1-14022

	STERLING HOUSE CORPORATION 
	(Exact name of Registrant as specified in its charter) 
 
	KANSAS								48-1097141 
(State or other jurisdiction of                         (I.R.S. Employer 
 incorporation or organization)                          Identification No.)
 
	453 S. WEBB ROAD, SUITE 500 
	WICHITA, KANSAS 67207
	(Address of principal executive offices) 
 
	(316) 684-8300
	(Registrant's telephone number, including area code) 
 
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements  for the past 90 days. 


	YES  X       NO___ 
 

As of August 5, 1997, there were 5,041,928 shares of the Registrant's Common
Stock outstanding. 
<PAGE>
	STERLING HOUSE CORPORATION 

	INDEX

PART 1. FINANCIAL INFORMATION 
                                                  										     	  PAGE NO.
Item 1.  Financial Statements: 
 
         Consolidated Balance Sheets at June 30, 1997 and
         December 31, 1996                                             3-4 
 
         Consolidated Statements of Operations for the 
         three months and six months ended June 30, 1997
         and 1996                                                        5 
 
         Consolidated Statements of Cash Flows for the
         six months ended June 30, 1997 and 1996                         6

         Notes to Consolidated Financial Statements                    7-8
 
Item 2.  Management's Discussion and Analysis of 
         Financial Condition and Results of Operations                9-15
 
PART II. OTHER INFORMATION 
 
Item 4.  Submission of Matters to a Vote of 
         Security Holders                                               16

Item 6.  Exhibits and Reports on Form 8-K                               16

         Signature Page                                                 17
 
 



























	2
<PAGE>
PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

<TABLE>
                          Sterling House Corporation 
                          Consolidated Balance Sheets 
                                 (Unaudited)
<CAPTION>


                                      June 30, 1997     December 31, 1996
<S>                                   <C>                   <C> 
Assets 
Current assets: 
 Cash and cash equivalents             $12,541,587           $13,658,827 
 Accounts receivable:
  Construction due from REIT                60,241             3,847,647 
  Trade                                  1,131,093               417,820 
  Other                                     41,245               143,138 
Advances to unconsolidated
 affiliates                             14,240,038                 ---   
Prerental costs (net of amortization)    1,015,666             1,339,309 
Other                                      970,765               560,151 
                                        ----------            ----------
Total current assets                    30,000,635            19,966,892 
 
Property and equipment: 
 Land and improvements                   1,533,921             1,384,013 
 Buildings                               9,590,929            10,230,687 
 Vehicles and equipment                  1,135,342               626,715 
 Furniture, fixtures 
  and office equipment                   1,677,131             1,311,823 
 Construction in progress               33,545,898            40,382,765 
                                        ----------            ----------  
                                        47,483,221            53,936,003 
 Less accumulated depreciation          (1,136,224)             (829,966)
                                        ----------            ----------
Net property and equipment              46,346,997            53,106,037 
 
Other assets: 
 Deferred financing costs                1,444,925             1,495,200 
 Restricted investments                  2,772,428             1,663,784 
 Other                                   2,259,650             1,586,505 
                                         ---------             ---------
Total other assets                       6,477,003             4,745,489 
                                       -----------           -----------
Total assets                           $82,824,635           $77,818,418 
                                       ===========           ===========



See accompanying notes. 
</TABLE>










	3
<PAGE>
<TABLE> 
                    	Sterling House Corporation 
	                    Consolidated Balance Sheets 
                          		(Unaudited)
<CAPTION>

                                      June 30, 1997          December 31, 1996
<S>                                    <C>                       <C>
Liabilities and Stockholders' Equity                                     
Current liabilities:  
 Accounts payable                       $11,017,186               $ 9,786,224 
 Accrued expenses: 
  Salaries and benefits                   1,325,831                   924,279 
  Interest                                  197,489                   107,912 
  Real estate and property taxes          1,163,840                   210,196
  Construction costs                      1,275,029                   778,989
  Other                                     347,659                   181,976 
 Deferred income taxes                      229,785                   236,894 
 Unearned rent and refundable deposits      312,019                   408,307 
 Current maturities of long-term debt
  and bonds payable                         211,406                   215,623 
                                         ----------                ----------
Total current liabilities                16,080,244                12,850,400 
 
Long-term debt                           41,399,492                39,589,497 
Deferred income taxes                       333,479                   423,177 
Deferred compensation                       366,173                   387,419 
Other                                       186,618                    57,977 
Minority interest in subsidiaries           174,777                     ---

Stockholders' equity: 
 Preferred stock; no par value 
  20,000,000 shares authorized, 
  none issued and outstanding                 ---                       ---
 Common stock; no par value; 75,000,000 
  shares authorized, 5,041,928 
  shares issued and outstanding
  (5,038,836 in 1996)                    28,250,827                28,216,042 
 Accumulated deficit                     (3,966,975)               (3,706,094)
                                         ----------                ----------
Total stockholders' equity               24,283,852                24,509,948 
                                         ----------                ----------
Total liabilities and stockholders'
 equity                                 $82,824,635               $77,818,418 
                                        ===========               ===========


See accompanying notes. 
</TABLE>













	4
<PAGE>
<TABLE>
                     	Sterling House Corporation 
	                 Consolidated Statements of Operations
                            	(Unaudited)
<CAPTION>
                                Three months ended             Six months ended
                                      June 30,                      June 30,
                                 1997          1996           1997         1996
                              _______________________________________________________
<S>                           <C>           <C>            <C>          <C>
Revenues:
 Residence rental             $9,867,855    $3,261,048     $17,460,364  $5,754,476 
 Initial franchise and
 royalty fees: 
  Affiliates                      15,027        16,224          26,563      28,826 
  Other                          106,894        21,514         140,350      51,697 
 Management and service fees: 
  Affiliates                      89,440         ---            89,440        --- 
  Other                           26,937        16,612          41,795      52,966 
Construction services                766        54,801          39,763      63,123
                              ----------     ---------      ----------   ---------
Total revenue                 10,106,919     3,370,199      17,798,275   5,951,088        
   
 
Operating expenses: 
 Residence operating expenses  6,169,865     2,134,733      11,029,645   3,796,559 
 General and administrative    1,320,286       597,091       2,258,726   1,191,283 
 Building rental               2,566,062       730,466       4,410,064   1,115,523 
 Depreciation and amortization   741,736       243,155       1,320,666     470,879 
 Construction costs               11,363        17,586          21,081      28,245 
                              ----------    ----------      ----------   --------- 
Total operating expenses      10,809,312     3,723,031      19,040,182   6,602,489 
 
Loss from operations            (702,393)     (352,832)     (1,241,907)   (651,401)
 
Other income (expenses): 
 Interest income                 348,375       323,258         527,852     534,262 
 Interest expense                (72,063)     (106,013)       (153,392)   (332,800)
 Minority interest in
  loss of subsidiaries           490,670         ---           525,223      --- 
 Other                            (6,097)       (8,039)        (16,319)    (20,257)
                                 -------       -------         -------     ------- 
Total other income               760,885       209,206         883,364     181,205

Income (loss) before income
 taxes                            58,492      (143,626)       (358,543)   (470,196)

(Provision) benefit for
 income taxes                    (15,793)       56,979          96,807     139,285 
                                 -------      --------        --------    --------
Net income (loss)           $     42,699    $  (86,647)     $ (261,736)  $(330,911)
                            ============    ===========     ===========  =========
Net income (loss) per
 common share               $        .01    $     (.02)     $     (.05)  $    (.07)
                            ============    ===========     ===========  =========
Weighted average number
 of shares outstanding during
 the period                    5,040,325     5,035,993       5,039,585   5,035,421
                               =========     =========       =========   =========

 See accompanying notes.
</TABLE>
	5

<PAGE>
<TABLE>
                               	Sterling House Corporation 
                         	Consolidated Statements of Cash Flows 
                                     	(Unaudited) 
<CAPTION>
                                                               Six months ended
                                                                   June 30
                                                           1997               1996    
                                                        ---------          --------
<S>                                                   <C>                <C>
Operating activities 
Net loss                                              $  (261,736)       $ (330,911)
Adjustments to reconcile net loss to net
 cash provided by (used in) operating activities:
  Depreciation and amortization                         1,320,666           470,879 
  Amortized rent and interest expense                      29,009            32,405 
  Deferred income taxes                                   (96,807)         (139,285)
  Minority interest in loss of subsidiaries              (525,223)            --- 
 Net change in operating assets and liabilities:
  Accounts receivable                                    (611,380)           11,615 
  Prerental costs                                        (590,377)         (504,919)
  Accrued expenses                                      1,610,456           512,232 
  Unearned rent and refundable deposits                   (96,288)            3,317 
  Accounts payable                                        180,135          (790,125)
  Deferred compensation                                   (21,246)          (21,335)
  Other                                                  (850,878)          (20,241)
                                                        ---------          --------
Net cash provided by (used in) operating activities        86,331          (776,368)

 Investing activities 
 Purchase of property and equipment                   (46,264,365)      (16,804,275)
 Proceeds from sale/leaseback transactions             54,224,854        12,292,497 
 Construction receivable due from REIT                  3,787,406           --- 
 Advances to unconsolidated affiliates                (20,536,489)          --- 
 Proceeds received from unconsolidated
  affiliates on advances                                6,296,451           ---
 Other                                                 (1,108,644)         (524,453)
                                                       ----------        ----------
Net cash used in investing activities                  (3,600,787)       (5,036,231)
 
Financing Activities 
  Proceeds from short-term borrowings                       ---           1,473,650 
  Principal payments on short-term borrowings               ---          (8,200,078)
  Principal payments on long-term debt                    (67,315)       (1,996,856)
  Convertible debt issued                                   ---          35,000,000 
  Proceeds from issuance of long-term debt              1,868,500            61,173 
  Expenditures for financing costs                        (34,514)       (1,602,000)
  Capital contributions by minority members               700,000           --- 
  Net change in bond reserve funds in trust              (104,240)         (275,066)
  Other                                                    34,785             7,737
                                                        ---------        -----------
Net cash provided by financing activities               2,397,216        24,468,560
Net increase (decrease) in cash                        (1,117,240)       18,655,961 
Cash at beginning of period                            13,658,827        17,396,355
                                                       ----------        ----------
Cash at end of period                                 $12,541,587       $36,052,316 
                                                      ===========       ===========



See accompanying notes. 
</TABLE>











	6

<PAGE>
                        	STERLING HOUSE CORPORATION
	              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  GENERAL
		The accompanying unaudited interim financial statements of
Sterling House Corporation (the "Company") have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission (the "SEC"). 
Certain information and note disclosures normally included in annual financial
statements have been condensed or omitted pursuant to those rules and 
regulations.  In the opinion of management, all adjustments, consisting of 
normal, recurring adjustments considered necessary for a fair presentation, 
have been included. Although management believes that the disclosures made 
are adequate to ensure that the information presented is not misleading, it 
is suggested that these financial statements be read in conjunction with the 
financial statements and notes thereto included in the Company's Annual 
Report on Form 10-K for the fiscal year ended December 31, 1996.  The results
of the three and six-month periods ended June 30, 1997 and 1996 are not 
necessarily indicative of the results of operations for the entire year. 

(2) BASIS OF PRESENTATION

	The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries, BCI Construction, Inc., 
BCINC, Inc., Assisted Living Properties, Inc. and Coventry Corporation 
("Coventry"). The Company's consolidated financial statements also include 
Austin Development, Limited, Waterford Development Company, L.L.C., Newport 
Development, L.L.C., Claremont Development, Limited Partnership, and 
Bridgeport Development, Limited (collectively known as the Company's 
Development Partnerships), all which are majority-owned subsidiaries of 
Coventry.  The "Minority interest in subsidiaries" represents the minority 
members' proportionate interest in the Company's Development Partnerships.  

    In addition, the Company has investment interests in certain limited
partnerships and limited liability companies that develop and operate Sterling
House  assisted living facilities.  Ownership of such investments at June 30,
1997, is 9.8% and the Company accounts for all such investments using the
equity method of accounting.

     All significant intercompany balances and transactions have been
eliminated.

(3)  NET LOSS PER COMMON SHARE AND RECENTLY ISSUED ACCOUNTING STANDARDS

    Net loss per common share has been computed by dividing net loss by the
weighted average number of common shares outstanding during each period.  The
weighted average number of common shares does not include any common stock
equivalents because, (1) stock options outstanding are not materially dilutive
and (2) common stock equivalents associated with the convertible debentures
would be anti-dilutive.

    In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" 
("FAS 128"), which specifies the computation, presentation, and disclosure 
requirements for earnings per share with the objective to simplify the 
computation of earnings per share.  FAS 128 is effective for financial 
statements for periods ending after December 15, 1997, and earlier 
application is not permitted.  After the effective
7 
<PAGE>
date, all prior period earnings per share data will be restated to conform
with the provisions of FAS 128.  The adoption of FAS 128 is not expected to 
have a material impact on the Company's earnings per share data.

(4)  ADVANCES TO UNCONSOLIDATED AFFILIATES 

     Advances to unconsolidated affiliates represent construction receivables
from certain affiliated limited partnerships and limited liability companies
in which the Company ownes a 9.8% ownership interest.  Such affiliates develop 
and operate Sterling House assisted living facilities.  Advances to such 
affiliates are reimbursed to the Company as the affiliates obtain permanent 
financing.  The affiliates will typically obtain financing through sale/
leaseback financing in accordance to the sale/leaseback commitments 
previously obtained by the Company.

(5)  SHAREHOLDERS RIGHTS PLAN

    On June 25, 1997, the Board of Directors of the Company declared a dividend
distribution of one Right for each outstanding share of the Company's Common 
Stock, to the holders of record on July 3, 1997.  Each Right entitles the 
registered holder to purchase from the Company one one-hundredth (1/100th)
of a share of Series A Junior Participating Stock no par value per share
(the "Series A Preferred Stock"), or, in some circumstances, Common Stock,
other securities, cash or other assets at a price of $80.00 per one one-
hundredth of a share with both shares and price being subject to adjustment
in certain events.  The complete terms and conditions of the Rights are set
forth in a Rights Agreement between the Company and ChaseMellon Shareholder
Services, Inc., as Rights Agent, dated as of June 25, 1997, as it may be
amended from time to time.

    Initially, the Rights will attach to all certificates representing out-
standing shares of Common Stock and no separate certificates for the Rights
("Rights Certificates") will be distributed.  The Rights will separate from
the Common Stock upon the "Distribution Date," which will occur upon the
earlier of (i) 10 days following a public announcement that a person or group
(an "Acquiring Person") has acquired beneficial ownership of 20% or more of
the outstanding shares of Common Stock or (ii) 10 business days following the 
commencement of a tender offer or exchange offer, the consummation of which 
would result in a person becoming an Acquiring Person or (iii) 10 business days
following a determination by the Company's Board of Directors that a person 
has become the beneficial owner of more than 10% of the outstanding shares of
Common Stock and (a) has acquired such beneficial ownership to cause the 
Company to repurchase the shares owned by such person or to pressure the 
Company to take some action that would provide such person with short-term 
financial gain under circumstances where the Board determines that the best 
long-term interests of the Company would not be served by taking such action or 
(b) such beneficial ownership is causing or is reasonably likely to cause a
material adverse impact on the business or prospects of the Company (any such
person, an "Adverse Person").  Until the Distribution Date, (a) the Rights
will be evidenced by Common Stock certificates and may be transferred only
with such certificates, (b) Common Stock certificates will contain a legend
incorporating the Rights Plan by reference and (c) the surrender for transfer 
of any certificate for Common Stock will also constitute the transfer of the
Rights associates with the stock represented by such certificate.

    The Rights are not exercisable until the Distribution Date and will expire
at the close of business on June 25, 2007 unless earlier redeemed by the 
Company.  (Reference is hereby made to the Company's Form 8-K filed with the
SEC on July 3, 1997.)  

(6)  SUBSEQUENT EVENTS

    Subsequent to June 30, 1997, the Company entered into a definitive
purchase agreement to purchase two assisted living residences from a 
franchisee of the Company.  The Company has also entered into a definitive 
lease agreement to lease two assisted living residences in Oklahoma and one 
in Texas from  LTC Properties, Inc. Both transactions are anticipated to 
close on or before September 1, 1997.

    On July 31, 1997, the Company announced that it had entered into a
definitive merger agreement under which a wholly owned subsidiary of 
Alternative Living Services, Inc. (AMEX:ALI) would merge with and into the 
Company and Alternative Living Services, Inc. would issue 1.1 shares of its 
common stock in exchange for each outstanding share of the Company's common 
stock.  (Reference is hereby made to the Company's Form 8-K filed with the 
SEC on August 13, 1997.)

(7)  RECLASSIFICATIONS

     Certain reclassifications have been made in the 1996 financial statements
to conform with the 1997 financial statement presentation.

























	8

<PAGE>
ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

         GENERAL.  During the first six months of 1997, the Company continued
to open residences according to its development strategy.  The Company has
completed 29 new residences during the first six months of 1997, bringing the
total residences open and operating at June 30, 1997 to 95, of which 85 are
owned/leased by the Company (four of which were owned/leased by unconsolidated
affiliates) and ten were franchised or managed.  At June 30, 1997, nine of
the Company's owned/leased residences had received their Certificate of 
Occupancy but were not fully licensed until July 1997.

         In February 1997, the Company formed a wholly owned subsidiary,
Coventry Corporation ("Coventry"), to enter into joint venture agreements 
with the Company's development partners.  Pursuant to the joint venture 
agreements, Coventry holds interests in various limited liability companies 
and limited partnerships (the "Development Partnerships") formed to develop 
Sterling House residences.  The Company's development strategy includes 
forming strategic alliances with regional real estate development partners 
which are anticipated to enable the Company to develop and construct 
additional residences while reducing the investment of, and associated risk 
to, the Company.  The Company's development partners generally provide 
construction management expertise, access to existing relationships with 
local contractors, suppliers and municipal authorities, knowledge of local 
and state building codes and zoning laws and assistance with site location 
for new residences while investing capital and sharing in the development 
risk of new properties.  The Company, through Coventry, assists in financing 
residences, contributes operational and industry expertise and has management
responsibility for the residences.  The Company has both the option, at its 
election, and an obligation, at the election of its development partners, to 
acquire the equity interests of the other partners at predetermined prices 
and times.  At June 30, 1997, unconsolidated affiliates operated four 
residences and had another eight under construction.  The Company holds a 
majority interest in all other Development Partnerships and their
respective residences are included in the Company's consolidated financial
statements. The allocation of profits and losses among the investors of the
Development Partnerships provides for changes in the allocations at specified
times or on the occurrence of specified events which reflect the economic 
substance of the joint venture arrangement; thus the allocation of profits 
and losses to the Company may be significantly different than it's stated 
ownership interests in the Development Partnerships. The Company plans to 
continue to utilize this development strategy in the future.  

     Subsequent to June 30, 1997, the Company entered into a definitive
purchase agreement to purchase two assisted living residences from a 
franchisee of the Company.  The Company has also entered into a definitive 
lease agreement to lease two assisted living residences in Oklahoma and one 
in Texas from LTC Properties, Inc.  Both transactions are anticipated to 
close on or before September 1, 1997.

     On July 31, 1997, the Company announced that it had entered into a
definitive merger agreement under which a wholly owned subsidiary of
Alternative Living Services, Inc. (AMEX:ALI) would merge with and into the 
Company and Alternative Living Services, Inc. would issue 1.1 shares of its 
common stock in exchange for each outstanding share of the Company's common 
stock.  (Reference is hereby made to the Company's Form 8-K filed with the 
SEC on August 13, 1997.)





	9

<PAGE>
GENERAL (continued)

	The following table presents the number of owned/leased and
managed/franchised residences, and the number of residences under construction
and under development, by state, as of June 30, 1997 and 1996.

                          Owned/       Managed/      Under            Under
                          Leased      Franchised   Construction    Development
Residences by State:   1997(1) 1996   1997   1996   1997   1996     1997   1996
                       ----    ----   ----   ----   ----   ----     ----   ----
  Kansas                16     13      8      7       1      0        0      1
  Oklahoma              23     14      0      0       1      6        0      3
  Texas                 25      5      0      0       0     11        0      9
  Florida               13      0      0      0       8      6        9      5
  Colorado               2      0      2      0       3      0        3      5
  Ohio                   6      0      0      0       8      0        4     13
  Iowa                   0      0      0      0       2      0        3      0
  N. Carolina            0      0      0      0       2      0        4      0
  S. Carolina            0      0      0      0       1      0        5      0
  Other States           0      0      0      0       0      0       12      0
                       ----   ----    ----   ----   ----   ----     ----   ----
Total residences        85     32     10      7      26     23       40     36

Total units          3,329  1,021    382     272  1,074    896    1,727  1,479
                     =====  =====    ===     ===  =====    ===    =====  =====
	
     (1)	Nine residences have a Certificate of Occupancy but were not yet
         fully	licensed until July 1997.  Includes four residences
         owned/leased by the Company	through Development Partnerships in which
         the Company holds a 9.8% ownership interest.



	The following table sets forth the number of residences and units
owned/leased or managed/franchised and the stabilized occupancy and private
pay percentages as of June 30, 1997 and 1996, and December 31, 1996, 1995 and
1994.


                    				                   June 30,          December 31,
                                        1997     1996    1996    1995    1994
                                        -------------    --------------------
Residences (end of period) 
  Owned/Leased                           76(1)     32      58      17       9
  Managed/Franchised                     10         7       8      10       6
                                         --        --      --      --      --
Total                                    86        39      66      27      15
Units (end of period)
  Owned/Leased                        2,979     1,021   2,035     516     250
  Managed/Franchised                    557       272     309     358     207
                                      -----     -----   -----     ---     ---
Total                                 3,536     1,293   2,344     874     457

Stabilized Occupancy Percentage (2)     95%      96%     97%     96%     95%
Units Private Pay                       98%     100%     99%    100%    100%
Average Monthly Rent/Unit            $1,757   $1,642  $1,688  $1,618  $1,505
Average Monthly Rent/Unit Including 
  Community Fees                     $1,804   $1,695  $1,753  $1,705     ---   


     (1)  Includes four residences owned/leased by the Company through
          Development Partnerships in which the Company holds a 9.8% ownership 
          interest.  Excludes nine residences not yet fully 
          licensed.

     (2)  Stabilized occupancy percentage represents the occupancy at the
          periods presented and only includes those residences that have been
          operating in excess of nine months or that have reached an 
          occupancy rate of 95%. (The stabilized occupancy percentage does 
          not include Managed/Franchised units).





	10

<PAGE>
GENERAL (continued)

     	Except for the historical information contained herein, the matters
discussed in this Management's Discussion and Analysis of Financial Condition
and Results of Operations are forward looking statements that involve risks and
uncertainties that could cause actual results to differ materially, including,
without limitation, risks associated with the Company's ability to develop,
construct, acquire or franchise additional assisted living residences in
accordance with the Company's development schedule including joint venture
related development activities, management of quarter to quarter results, and
other risks detailed from time to time in the Company's SEC reports.  The risk
factors and information set forth in "Risk Factors" in the Company's 1996 Form
10-K should be carefully considered in the evaluation of the Company, its
business and its investment value. Updated information will be periodically
provided by the Company as required by the Securities Exchange Act of 1934.

RESULTS OF OPERATIONS

Three months ended June 30, 1997 and 1996

	REVENUES.  Total revenue for the three months ended June 30, 1997,
increased to $10,107,000 compared to $3,370,000  for the three months ended
June 30, 1996, an increase of $6,737,000 or 200%.  This increase was primarily
attributable to an increase of $6,607,000 in residence rentals as a result of 
the 1,958 new rental units at 40 residences that have been developed or
acquired by the Company since June 30, 1996.  The average monthly rental per 
resident for the three months ended June  30, 1997, increased to $1,757 
compared to $1,642 for the same period in 1996.  Payments from Medicaid 
programs comprised approximately 2% of the Company's revenue for the three 
months ended June 30, 1997.  The Company anticipates that the percentage of 
revenue derived from Medicaid programs will increase, although revenues from 
private pay residents will continue to be the Company's predominant source of
revenue.

	RESIDENCE OPERATING EXPENSES.  Residence operating expenses increased to
$6,170,000 for the three months ended June  30, 1997, compared to $2,135,000
for the three months ended June 30, 1996, an increase of $4,035,000 or 189%. 
The increase is attributable to the increase in residences as described 
above.  In addition, beginning in September 1996, the Company opened 
residences with an increased number of units, resulting in higher operating 
expenses, primarily property expenses, during the stabilization period of 
these residences.

	At June 30, 1997, the Company had certificates of occupancy on 85
residences, including four residences owned/leased through Development 
Partnerships in which the Company holds a 9.8% ownership interest, 76 of 
which were fully operational, compared to the 32 residences opened at 
June 30, 1996, all of which were fully operational.

	GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative
expenses increased to $1,320,000 for the three months ended June 30, 1997, from
$597,000 for the three months ended June 30, 1996, an increase of $723,000 or
121%. The increase is primarily attributable to the increase in payroll and 
associated costs relating to additions in management and other personnel to 
support the additional residences operated by the Company and its growing 
development program, as well as travel costs associated with new residences 
located in additional states.

	BUILDING RENTAL.  Building rental increased to $2,566,000 for the three
months ended June 30, 1997, up from $730,000 for the three months ended June
30, 1996, an increase of $1,836,000 or 252%.  The increase is attributable to
the Company having 57 residences under  operating leases at June 30, 1997,
compared to 17 residences under operating leases at June 30, 1996, an 
increase of 40 residences.
	11
<PAGE>
RESULTS OF OPERATIONS (continued)

	DEPRECIATION AND AMORTIZATION.  Depreciation and amortization increased
to $742,000 for the three months ended June 30, 1997, compared to $243,000 for
the three months ended June 30, 1996, an increase of $499,000 or 205%.  This
increase is primarily attributable to the increase in prerental cost 
amortization during the current period.  Prerental cost amortization was 
$499,000 for the three months ended June 30, 1997, compared to $136,000 for 
the three months ended June 30, 1996, an increase of $363,000.  Prerental 
costs represent preopening marketing, employee recruitment and training, and 
other start-up expenditures necessary to prepare the residences for 
occupancy. These prerental costs are amortized over a 12-month period 
commencing the month the residence opens. Prerental  costs (net of 
amortization)  were  approximately $1,016,000 at June 30, 1997, compared to 
approximately $555,000 at June 30, 1996, an increase of approximately 
$461,000 or 83%.  The increase in prerental costs is primarily attributable 
to 44 residences opened for twelve months or less at June 30, 1997,
compared to 11 such residences at June 30, 1996. 

	Excluding prerental cost amortization, depreciation and other
amortization expense was $243,000 for the three months ended June  30, 1997, 
compared to $107,000 for the three months ended June 30, 1996, an increase of
$136,000 or 127%.  The increase is attributable to the additional property 
and equipment acquired since June 30, 1996.

	INTEREST INCOME.  Interest income increased to $348,000 for the three
months ended June 30, 1997, up from $323,000 for the three months ended June
30, 1996, an increase of $25,000 or 8%. 

	INTEREST EXPENSE.  Interest expense for the three months ended June 30,
1997, was $72,000 (net of interest capitalization of $472,000) compared to
$106,000 (net of interest capitalization of $174,000) for the three months
ended June 30, 1996, a decrease of $34,000 or 32%.  The decrease in interest 
expense is primarily attributable to the increase in interest capitalization 
resulting from an increase in the Company's level of construction in progress
between the same periods.  Construction in progress totaled $33,546,000 and 
$12,205,000 at June 30, 1997 and 1996 respectively.

	MINORITY INTEREST IN LOSS OF SUBSIDIARIES.  Minority interest in loss of
subsidiaries was $491,000 for the three months ended June 30, 1997, compared
to $0 for the three months ended June 30, 1996.  The losses represent the share
of losses allocated to the minority joint venture partners in the Development
Partnerships formed in the first six months of 1997.

	INCOME TAXES.  The Company recorded income tax expense of $16,000 for
the three months ended June 30, 1997, compared to an income tax benefit of 
$57,000 for the three months ended June 30, 1996. The expense is due to the 
Company achieving profitability in the second quarter of 1997.











12
<PAGE>
RESULTS OF OPERATIONS (continued)

Six months ended  June 30, 1997 and 1996

	REVENUES.  Total revenue for the six months ended June 30, 1997,
increased to $17,798,000 compared to $5,951,000  for the six months ended 
June 30, 1996, an increase of $11,847,000 or 199%.  This increase was 
primarily attributable to an increase of $11,706,000 in residence rentals as 
a result of the 1,958 new rental units at 40 residences that have been 
developed or acquired by the Company since June 30, 1996.  The average 
monthly rental per resident for the six months ended June  30, 1997, 
increased to $1,754 compared to $1,642 for the same period in 1996.  
Payments from Medicaid programs comprised approximately 1% of the Company's 
revenue for the six months ended June 30, 1997.  The Company
anticipates that the percentage of revenue derived from Medicaid programs will
increase, although revenues from private pay residents will continue to be the
Company's predominant source of revenue.

	RESIDENCE OPERATING EXPENSES.  Residence operating expenses increased to
$11,030,000 for the six months ended June  30, 1997, compared to $3,797,000
for the six months ended June 30, 1996, an increase of $7,233,000 or 190%.  The
increase is attributable to the increase in residences as described above.  In
addition, beginning September 1996, the Company opened residences with an
increased number of units, resulting in higher operating expenses, primarily
property expenses, during the stabilization period of these residences.

	At June 30, 1997, the Company had certificates of occupancy on 85
residences, including four residences owned/leased by through
Development Partnerships in which the Company holds a 9.8% ownership, 76 of 
which were fully operational, compared to the 32 residences opened at June 
30, 1996, all of which were fully operational.

	GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative
expenses increased to $2,259,000 for the six months ended June 30, 1997, from
$1,191,000 for the six months ended June 30, 1996, an increase of $1,068,000 
or 90%.  The increase is primarily attributable to the increase in payroll 
and associated costs relating to additions in management and other personnel 
to support the additional residences operated by the Company and its growing 
development program, as well as travel costs associated with new residences 
located in additional states.

	BUILDING RENTAL.  Building rental increased to $4,410,000 for the six
months ended June 30, 1997, up from $1,116,000 for the six months ended June
30, 1996, an increase of $3,294,000 or 295%.  The increase is attributable to
the Company having 57 residences under  operating leases at June 30, 1997,
compared to 17 residences under operating leases at June 30, 1996, an 
increase of 40 residences.

	DEPRECIATION AND AMORTIZATION.  Depreciation and amortization increased
to $1,321,000 for the six months ended June 30, 1997, compared to $471,000 
for the six months ended June 30, 1996, an increase of $850,000 or 180%.  This
increase is primarily attributable to the increase in prerental cost 
amortization during the current period.  Prerental cost amortization was 
$902,000 for the six months ended June 30, 1997, compared to $216,000 for the
six months ended June 30, 1996, an increase of $686,000.  Prerental costs 
represent preopening marketing, employee recruitment and training, and other 
start-up expenditures necessary to prepare the residences for occupancy. 
These prerental costs are amortized over a 12-month period commencing the 
month the residence opens.   Prerental  costs (net of amortization) were 
$1,016,000 at June 30, 1997, compared to  
13
<PAGE>
RESULTS OF OPERATIONS (continued)

$555,000 at June 30, 1996, an increase of approximately $461,000 or 83%.  The
increase in prerental costs is primarily attributable to 44 residences opened
for twelve months or less at June 30, 1997, compared to eleven such 
residences at June 30, 1996. 

	Excluding prerental cost amortization, depreciation and other amortization
expense was $419,000 for the six months ended June  30, 1997, compared to
$255,000 for the six months ended June 30, 1996, an increase of $164,000 or
64%.  The increase is attributable to the additional property and equipment 
acquired since June 30, 1996.

	INTEREST INCOME.  Interest income decreased to $528,000 for the six months
ended June 30, 1997, down from $534,000 for the six months ended June 30,
1996, a decrease of $6,000.
 
	INTEREST EXPENSE.  Interest expense for the six months ended June 30, 1997,
was $153,000 (net of interest capitalization of $1,119,000) compared to
$333,000 (net of interest capitalization of $509,000) for the six months 
ended June 30, 1996, a decrease of $180,000 or 54%.  The decrease in interest
expense is primarily attributable to the increase in interest capitalization 
resulting from an increase in the Company's level of construction in progress
between the same periods.  Construction in progress totaled $33,546,000 and 
$12,205,000 at June 30, 1997 and June 30, 1996, respectively.

	MINORITY INTEREST IN LOSS OF SUBSIDIARIES.  Minority interest in loss of
subsidiaries was $525,000 for the six months ended June 30, 1997, compared to
$0 for the six months ended June 30, 1996.  The losses represent the share of
losses allocated to the minority joint venture partners in the Development
Partnerships formed in the first six months of 1997.

	INCOME TAXES.  The Company recorded an income tax benefit of $97,000 for
the six months ended June 30, 1997, compared to $139,000 for the six months
ended June 30, 1996, a decrease of $42,000 or 30%.  The decrease is related 
to the decrease in the Company's net loss before income taxes for the six month
period ended June 30, 1997, compared to the same period in 1996.

LIQUIDITY AND CAPITAL RESOURCES

	Working capital at June 30, 1997, was $13,920,000 up from $7,116,000 at
December 31, 1996.  Net cash provided from operating activities totaled
$86,000, for the six months ended June 30, 1997, compared to net cash used in
operating activities of $776,000 in the 1996 period.  This improvement in 
operating cash flow was primarily due to the increase in the number of 
stabilized residences at June 30, 1997.  Net cash used in investing 
activities was $3,601,000 for the six months ended June 30, 1997, compared to
$5,036,000 for the 1996 period.  This improvement in investment cash flows
resulted primarily from the addition of $46,264,000 in property and equipment
, $20,536,000 advanced to unconsolidated affiliates and offsetting proceeds 
of $54,225,000 from sale/leaseback transactions and $6,296,000 received from 
unconsolidated affiliates during the first six months of 1997.  Net cash 
provided by financing activities totaled $2,397,000 for the six months ended 
June 30, 1997, compared to $24,500,000 for the 1996 period.  Financing 
activities in the 1997 period consists of cash received from mortgage 
financing of one residence of $1,868,000 and capital contributions by 
minority interest members of $700,000.  The 1996 period included the issuance
of $35,000,000 of convertible subordinated debentures.


	14


<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (continued)

	The Company has entered into sale/leaseback agreements with certain
REIT's providing for over $323,000,000 as a source of financing the 
development, construction and, to a lesser extent, acquisitions of 
assisted living residences. Under such agreements, the Company enters into a 
series of sale/leaseback transactions, whereby the Company sells residences 
at negotiated values and concurrently enters into a lease agreement for each 
residence.  The initial terms of the leases vary from 10 to 15 years and 
include aggregate renewal options ranging from 15 to 40 years.  The Company 
is responsible for all operating costs, including repairs, property taxes, 
and insurance.  Typically the lease arrangements provide the Company with a 
right of first refusal if the REIT were to seek to sell the property.  The 
annual minimum lease payments are based upon a percentage of the negotiated 
sales value of each residence.  These percentages are typically equal to the 
yield of the most actively traded U.S. Treasury Note with a  maturity 
comparable to the initial term of the lease in effect at the time of the 
transaction plus rates ranging from 3.20% to 3.75%.  The minimum lease 
payments are adjusted annually by a percentage multiplier that is
contingent upon changes in the Consumer Price Index.  Through July 31, 1997,
the Company had used approximately $141,500,000 of the committed REIT 
financing. The Company accounts for these leases as operating leases.

	Capital expenditures for 1997 are estimated to total approximately 
$110,000,000 to $130,000,000, related primarily to the development of
additional residences, which will be financed principally with sale/leaseback
transactions. During the first six months of 1997, the Company's capital 
expenditures totaled $66,801,000.  The Company intends to satisfy future 
capital requirements for its development activities by various means, 
including financing obtained from sale/leaseback transactions, construction 
and other debt financing and, to the extent available, cash generated from 
operations.  The Company does not anticipate any significant capital 
expenditures within the foreseeable future with respect to its existing 
residences.  It is expected that cash generated from operations will be 
sufficient to fund any capital expenditures the Company may be required to 
make with respect to its existing residences.
























	15

<PAGE>
PART II. OTHER INFORMATION
	
Item 4.  Submission of Matters to a Vote of Security Holders

	At the Company's Annual Meeting of Stockholders held on May 23, 1997,
the following individuals were elected to the Board of Directors until the 
2000 Annual Meeting of Stockholders:

                                   Votes for    Votes Withheld    
	Michael F. Bushee                 4,623,157         2,605
	D. Ray Cook, M.D.                 4,623,107         2,655

	The terms of Ms. Diana M. Laing and Mr. Ronald L. Mercer as Directors of
the Company continued after the meeting and will expire at the 1999 Annual
Meeting of Stockholders.  The terms of Messrs. Timothy J. Buchanan and Steven
L. Vick as Directors of the Company continued after the  meeting and will 
expire at the 1998 Annual Meeting of Stockholders.

	The following proposals were approved at the Company's Annual Meeting:

                             Affirmative   Negative     Votes        Votes
                                 Votes       Votes    Abstained    Withheld
                             -----------   --------   ---------    --------
 
1.	Ratify the appointment
of Ernst & Young LLP as
independent auditors for 
the fiscal year ending 
December 31, 1997.		          4,623,062	     2,000		     700           0

2.	Ratify the amendment
of the Sterling House 
Corporation 1995 Incentive
Plan by allocating 400,000
additional Common Shares
to be potentially issued
pursuant to the terms of
the Incentive Plan.           3,941,663    219,252     2,580       462,267

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

	See Index to Exhibits

B.	Reports on Form 8-K   
       
      During the second quarter of 1997, the Company filed the following 
      report on Form 8-K.

      (i)  Current Report on Form 8-K dated June 25, 1997 (filed July 3, 1997),
           reporting under Item 5, the adoption of a Shareholders Rights Plan.










16
<PAGE>
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. 
 
Dated August 14, 1997
  


 
STERLING HOUSE CORPORATION 
(Registrant) 



/s/  Timothy J. Buchanan   
Timothy J. Buchanan 
Chief Executive Officer 
 

  
/s/  Mark Ohlendorf       
Mark Ohlendorf
Chief Financial Officer













                                   




















17
<PAGE>
STERLING HOUSE CORPORATION

INDEX TO EXHIBITS 

Exhibit  
Number      Description                                                        
------------------------------------------------------------------------------
4          Right Agreement, dated as of June 25, 1997, between Sterling House
           Corporation and ChaseMellon Shareholder Services, as Rights Agent.
           Filed as Exhibit 4 to the Registrant's Current Report Form 8-K
           dated June 25, 1997 (filed July 3, 1997) (the "June 25, 1997 Form
           8-K").

10.1       Amendment to Commitment Letter dated April 3, 1996 by and between   
           Sterling House Corporation and Health Care REIT.

10.2       Commitment Letter to purchase and lease Assisted Living Residences,
           dated July 11, 1997, by and between Sterling House Corporation and
           LTC Properties, Inc.

10.3       Commitment Letter to purchase and lease Assisted Living Residences,
           dated August 4, 1997, by and between Sterling House Corporation and
           Nationwide Health Properties, Inc.

10.4       Management Agreement dated August 1, 1997, by and between Sterling 
           House Corporation and Savannah Square of Weatherford, Inc.

10.5       Management Agreement dated July 19, 1997, by and between Sterling
           House Corporation and Colorado Springs Assisted Living, LLC.

10.6       Purchase Agreement dated July 14, 1997, by and between Sterling
           House Corporation and Colorado Springs Assisted Living, LLC.

10.7       Lease Agreement dated August 1, 1997, by and between Sterling House
           Corporation and LTC Properties, Inc.

10.8       Employment Agreement by and between Sterling House Corporation and  
           Mark W. Ohlendorf.

10.9       Commitment Letter to purchase and lease Assisted Living Residences  
           dated July 8, 1997, by and between Sterling House Corporation and   
           Meditrust, Inc.

10.10      Second Amendment to Lease Agreement dated May 31, 1997, by and
           between Sterling House Corporation and Phil G. Ruffin.

10.11      Form of Joint Venture Agreement by and between Coventry corporation
           and Elderly Living, Limited Partnership, filed as Exhibit 10.9 to
           the Registrant's Quarterly Report dated March 31, 1997.

10.12      Schedule of executed Joint Venture agreements by and between
           Coventry Corporation and Elderly Living, Limited Partnership.

10.13      Form of Joint Venture Agreement by and between Coventry Corporation
           and Elderly Living, Limited Partnership.

10.14      Schedule of executed Joint Venture Agreements by and between
           Coventry Corporation and Elderly Living, Limited Partnership.







                                      18

<PAGE>
Exhibit
Number     Description                                                        
------------------------------------------------------------------------------

10.15      Form of Operating Agreement by and between Coventry Corporation and
           Elderly Living, Limited Partnership.

10.16      Schedule of Executed Operating Agreements by and between Coventry
           Corporation

10.17      Form of License Agreement by and between Sterling House
           Corporation.

10.18      Schedule of Executed License Agreements by and between Sterling
           House Corporation.

10.19      Form of Limited Partnership Agreement by and between Coventry
           Corporation.

10.20      Schedule of executed Limited Partnership Agreements by and between
           Coventry Corporation.

10.21      Form of Management Agreement by and between Sterling House
           Corporation.

10.22      Schedule of executed Management agreements by and between Sterling
           House Corporation.

20         Letter to the holders of Sterling House Corporation Common Stock,
           dated July 3, 1997 (including Summary of Rights).  Filed as Exhibit
           20 to the June 25, 1997 Form 8-K.

27         Financial Data Schedule, which is submitted electronically to the   
           Securities and Exchange Commission for information only.

99         Press Release, dated June 25, 1997.  Filed as Exhibit 99 to the
           June 25, 1997 Form 8-K.




























19