FORM  10-K

                      SECURITIES  AND  EXCHANGE  COMMISSION
                            Washington,  D.C.  20549

(Mark  One)

[X]  ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934
For  the  fiscal  year  ended  June  30,  2000
                                              OR

[  ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d) OF THE SECURITIES
      EXCHANGE  ACT  OF  1934
For  the  transition  period  from ------ to ------

Commission  file  number  1-8824
                          CLAYTON  HOMES,  INC.
     (Exact  name  of  registrant  as  specified  in  its  charter)

Delaware                                62-1671360
----------------------------------      ---------------------------------------
(State  or  other  jurisdiction of      (I.R.S. Employer Identification Number)
incorporation or organization)

5000  Clayton  Road
Maryville,  Tennessee                  37804
---------------------------------      -----------------------------------------
(Address  of  principal  executive     (Zip  Code)
offices)

Registrant's  telephone  number,  including  area  code:  865-380-3000
Securities  registered  pursuant  to  Section  12(b)  of  the  Act:

                                                    Name  of  each  exchange  on
Title  of  each  class                              which  registered
-----------------------------------------           ----------------------------
COMMON  STOCK,  $.10  PAR VALUE PER SHARE           NEW YORK STOCK EXCHANGE


      Securities  registered  pursuant  to  section  12(g)  of  the  Act:  None

Indicate  by check mark whether 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  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form  10-K.  [  ]

Aggregate  market  value  of  the  voting  stock  held  by non-affiliates of the
registrant  on  August  30,  2000,  was approximately $947,184,564  (98,357,691
shares  at  closing  price  on  the  NYSE  of  $9.63).

Shares  of  common  stock,  $.10 par value, outstanding on August 30, 2000, were
137,540,170.

Exhibit  index  appears  on  pages  14-15.

                                 DOCUMENTS  INCORPORATED  BY  REFERENCE

<TABLE>
<CAPTION>
Part  of  Form  10-K                 Documents  from  which  portions  are  incorporated  by  reference
--------------------                 ------------------------------------------------------------------
<S>                                                                                            <C>
Part II (except for Item 5)          Annual Report to Shareholders for fiscal year ended June 30, 2000

Part III                             Proxy Statement relating to Company's
                                     Annual Meeting of Shareholders on November 1, 2000
</TABLE>

                                         1
<PAGE>


                                 CLAYTON  HOMES,  INC.

                                       PART  I
ITEM  1.  BUSINESS.

GENERAL

Clayton  Homes,  Inc.  and its subsidiaries (the Company) produce, sell, finance
and  insure primarily low to medium-priced manufactured homes.  The Company's 20
manufacturing plants produce homes which are marketed in 33 states through 1,101
retailers, of which 318 are Company-owned sales centers and 76 are Company-owned
community  sales  offices.  Installment  financing  and  insurance  products are
offered  to its homebuyers and those buying from selected independent retailers.
Such  financing  is  provided  through  its  wholly-owned  finance  subsidiary,
Vanderbilt  Mortgage  and Finance, Inc. (VMF).  The Company acts as agent, earns
commissions  and reinsures risks on physical damage, family protection, and home
buyer  protection  insurance  policies issued by a non-related insurance company
(ceding  company) in connection with its home sales.  The Company also develops,
owns,  and  manages  manufactured  housing  communities.

The Company is a Delaware corporation whose predecessor was incorporated in 1968
in  Tennessee.  Its  principal  executive  offices  are  located near Knoxville,
Tennessee.

The  following  table  indicates the percentage of revenue derived from sales by
Company-owned  retail  centers,  sales  to  independent  retailers and financial
services  operations  and  other income for each of the last three fiscal years.

<TABLE>
<CAPTION>
                                         YEAR ENDED JUNE 30,
                                        2000     1999     1998
                                        ----     ----     ----
<S>                                      <C>      <C>      <C>
Sales by Company-owned retail centers
  and communities                        55%      53%      50%
Sales to independent retailers           22%      25%      28%
Financial services and other             23%      22%      22%
                                        ----     ----     ----
Total                                   100%     100%     100%
                                        ====     ====     ====
</TABLE>

For information relating to the Company's four major business segments, see Note
10  to  the  Consolidated Financial Statements in the Company's Annual Report to
Shareholders.

MANUFACTURED  HOMES

A  manufactured home made by the Company is a factory-built, completely finished
dwelling.  Constructed to be transported by truck, the home is mounted on wheels
attached  to  its  frame.  Manufactured  homes  are  designed  to  be permanent,
owner-occupied  residences  sited  and  attached  to  utilities.

The  Company  manufactures a variety of single and multi-section homes in a wide
price range.  Retail prices range from $10,000 to $75,000 with sizes from 500 to
2,400  square  feet.

The  Company  markets  homes  under  the names of Clayton and Norris.   Included
standard  features  are  central  heating,  range,  refrigerator,  and
color-coordinated  window, wall and floor treatments.  Optional features include
central  air  conditioning,  wood-burning fireplaces, hardwood floors, whirlpool
tubs,  entertainment  systems,  microwaves,  dishwashers,  washers  and  dryers,
skylights  and  furniture.

MANUFACTURING  OPERATIONS

The  Company manufactures homes in 20 facilities, ranging in size from 63,000 to
194,000  square  feet.  See "Item 2. Properties" for a listing by location.  The
Company's  manufactured  homes  are  built  in  its  plants  using assembly-line
techniques. Completion of a home ordinarily takes two days.  Homes are generally
produced  to fill orders  received  from  independent  and Company-owned retail
centers;  therefore  the  Company  does  not  normally  maintain  a  significant
inventory of homes at its plants.  Completed homes are transported to the retail
centers  by  independent  carriers.

                                         2
<PAGE>

The  Company's  plants  operate  on  a  one-shift-per-day  basis, normally for a
five-day week, with the capacity to produce approximately 35,000 homes per year.
During  the  fiscal year ended June 30, 2000, the Company produced 26,504 homes.

The  principal  materials  utilized in the production of the Company's homes are
steel, aluminum, wood, fiberglass, carpet, vinyl floor covering, hardware items,
appliances  and  electrical  items.  The Company purchases these and other items
from  a  number  of supply sources, and it believes that the materials and parts
necessary  for  the  construction  and assembly of its homes will remain readily
available  from  these  sources.  In  the  event that any of these items are not
readily  available  or are available at a higher cost than could be passed on to
consumers,  the  operations  of  the  Company  could  be  adversely  affected.

The  Company  offers  one  year limited warranty programs covering manufacturing
defects  in  materials or workmanship in a home.  Warranties covering appliances
and  equipment  installed  in  the  homes  generally  are  obligations  of  the
manufacturers  of such items and not those of the Company.  Warranty and service
costs  during  the  years ended June 30, 2000, June 30, 1999, and June 30, 1998,
amounted  to  approximately  $14,589,000,  $16,085,000,  and  $14,801,000,
respectively.

The  backlog  of  firm  orders  for homes manufactured by the Company, including
orders  from  Company-owned  retail  centers,  was approximately $16,000,000 and
$42,600,000  on  June  30, 2000, and 1999, respectively.  Based on the Company's
production  rate,  approximately  two  weeks  would  be required to fill backlog
orders  at  June  30,  2000.

SALES  OF  HOMES  MANUFACTURED  BY  THE  COMPANY

The following table sets forth manufacturing sales and other data for the
periods indicated.

<TABLE>
<CAPTION>

                                                            YEAR ENDED JUNE 30,
                                                          2000      1999      1998
                                                          ----      ----      ----
<S>                                                      <C>       <C>       <C>
Number of homes sold to independent retailers            12,247    14,980    14,728
Number of homes shipped to Company-owned retail centers  14,101    13,364    12,922
                                                         ------    ------    ------
Total                                                    26,348    28,344    27,650
                                                         ======    ======    ======
Number of plants operating                                   20        19        18
Number of independent retailers                             707       671       702
Number of Company-owned communities                          76        75        71
Number of Company-owned retail centers                      318       306       273
</TABLE>

COMPANY  RETAIL  OPERATIONS

As  of  June  30,  2000, the Company sold homes through 318 Company-owned retail
centers  in  23  states.  In  addition  to  selling  homes built by the Company,
virtually  all  of  these  retail  centers  sell new homes manufactured by other
companies  and  previously-owned  manufactured  homes.

The  following  table  indicates  the number of Company-owned retail centers and
certain  information  relating to homes sold during the last three fiscal years.

<TABLE>
<CAPTION>

                                                                YEAR ENDED JUNE 30,
                                                           2000        1999        1998
                                                           ----        ----        ----
<S>                                                     <C>         <C>        <C>
Number of Company-owned retail centers                      318         306         273
Number of new homes sold (including homes built by the
   Company and by other manufacturers)                   14,022      14,894      13,250
Average retail price of new homes sold                  $43,892     $41,173     $37,864
Number of previously-owned homes sold                     3,910       4,580       3,287
</TABLE>

All  of  the  Company-owned  retail centers employ salespeople who are primarily
compensated  on  a  commission  basis.  The  retail  centers  do  not  have
administrative  staffs  since most administrative functions are performed at the
Company's  corporate  headquarters.

                                         3
<PAGE>

To  provide  customers  a  wider  price  range  of  homes, the Company purchases
and acquires on trade previously-owned  homes  from  individuals  and from other
retailers, as well as foreclosed  homes  from  lenders  throughout  its  trade
territory.

Homes  sold  by  Company-owned  retail  centers are delivered to the homeowners'
sites  by  trucks  either  owned  by  the  Company  or leased for the particular
delivery.  The  purchase price of the home may include delivery and setup of the
home at the retail homeowner's site.  Electrical, water, and gas connections are
performed  by  licensed  technicians.

INDEPENDENT  RETAILERS

In  the years ended June 30, 2000, and 1999, 46% and 53%, respectively, of homes
manufactured  by the Company were sold to its independent retailers.  As of June
30,  2000,  the  Company  supplied  707  independent retailers in 30 states with
homes.  The  Company's  independent  retailer  network  enables it to distribute
homes  to  more  markets,  more  quickly,  without  as  large  an  investment in
management  resources  and  overhead  expenses as is required with Company-owned
retail  centers.  Sales  to  independent  retailers  ensure the Company that its
homes  are  competitive  with  other  manufacturers  in  terms  of  consumer
acceptability,  product  design,  quality  and  price.

The  Company's  finance subsidiary, VMF, provides financing for retail customers
of  select  independent  retailers  with terms and conditions similar to those
provided  to  Company-owned  locations.

The  Company  establishes relationships with independent retailers through sales
representatives  from  its  manufacturing  plants.  These  representatives visit
independent  retailers  in  assigned  areas  to solicit orders for the Company's
homes.  The  area  is  generally  limited  to a 500 mile radius from each of the
Company's  manufacturing  plants  due  to  the  relatively  significant  cost of
transporting  a  home.  Depending  on the cost of the home and the manufacturing
competition  within  the  area,  a  home may be competitively shipped shorter or
longer  distances.  During  each  of  the  last  three  fiscal years no retailer
accounted  for  more  than  2%  of  the  Company's  consolidated  revenues.

The  Company's  independent  retailers  provide  their  own inventory financing,
allowing  the  Company  to  receive payment for homes within two weeks after the
home  is  constructed.  The  Company  does  not  require  agreements  with  its
independent  retailers, and the relationship between the Company and each of its
independent  retailers  may  be  terminated  at  any  time by either party.  The
Company  believes its relationships with independent retailers are good, and has
experienced  relatively  little turnover among independent retailers in the past
several  years.  The Company generally has little control over the operations of
independent  retailers.

Typically  the  Company  neither  provides  inventory financing arrangements for
independent  retailer  purchases  nor  consigns  homes.  As  is customary in the
industry,  lenders  financing  independent  retailer  purchases require that the
Company  execute  repurchase  agreements  which  provide  that,  in the event of
retailer  default  under  the  retailer's  inventory financing arrangements, the
Company  will  repurchase  homes  for the amount remaining unpaid to the lender,
excluding  interest and repossession costs.  Historically, any homes repurchased
under  such  agreements  are  immediately  resold  to other retailers, including
Company-owned  retail  centers,  at  the repurchase price.  During the last five
fiscal  years,  the  Company  has  incurred no significant losses resulting from
these contingent obligations, but there can be no assurance that losses will not
occur  in  the  future.

FINANCIAL  SERVICES

The  Company  believes  that  the  ability to make financing available to retail
purchasers  is a material factor affecting the market acceptance of its product.
The  Company  facilitates retail sales by offering various finance and insurance
programs.  The  following table reflects the relative percentages of homes sold
by  Company-owned retail centers which were financed through the Company, either
by  VMF  or  by  conventional  lenders,  and  those  sales made to customers who
arranged  their  own  financing  or  paid  cash.


                                         4
<PAGE>

<TABLE>
<CAPTION>
                                   YEAR ENDED JUNE 30,
                                  2000     1999    1998
                                 -----     ----    ----
<S>                             <C>       <C>      <C>
VMF                                76%      72%     75%
Conventional lenders                3%       7%      5%
Customer arranged or cash          21%      21%     20%
                                  ----     ----    ----
Total                             100%     100%    100%
                                  ====     ====    ====
</TABLE>

VMF  also  purchases  and  originates  manufactured housing installment contract
receivables  (also  referred  to  as  manufactured  housing  contracts)  on  an
individual  basis  from  independent  retailers.  Retailers  submit  homebuyer
applications  to  VMF for approval and, provided that credit reports, employment
verification,  and  income  and  debt  analysis  meet VMF's criteria, a contract
purchase  commitment  is  issued  to  the  selling  retailer.

VMF  makes  bulk  purchases  of  manufactured  housing  contracts from banks and
commercial lenders. It also performs, on behalf of other institutions, servicing
of  manufactured housing contracts that were not purchased or originated by VMF.
These purchases and servicing arrangements may relate to the portfolios of other
lenders  or  finance  companies,  governmental  agencies, or other entities that
purchase  and  hold  manufactured  housing  contracts.

UNDERWRITING  POLICIES.  Retail customers of the Company who express a desire to
obtain  financing  by  or through the Company complete a credit application form
which  is  initially  reviewed  by  the  manager  of  the retail center and then
forwarded  to  VMF.

VMF's  underwriting  guidelines require that each applicant's credit, residence,
employment  history  and  income  to  debt  payment  ratios  meet  predetermined
guidelines.  If  in the judgment of the VMF credit manager an applicant does not
meet  minimum underwriting criteria, there must be other determining criteria in
order  for an applicant to be approved.  Credit managers confirm that the credit
investigation  gives  a  complete  and  up-to-date accounting of the applicant's
creditworthiness  and  are  encouraged  to  obtain  second opinions on loans for
relatively  large  dollar  amounts or those which tend to rank lower in terms of
underwriting  criteria.  Generally,  the  sum of the monthly installment housing
obligation,  which  includes the manufactured home loan payment and monthly site
costs,  should  not  exceed  28%  of  the  applicant's  gross  monthly  income.

With respect to those homebuyers which are approved, VMF requires a down payment
in the form of cash, the trade-in value of a previously-owned manufactured home,
and/or  the  estimated  value  of  equity in real property pledged as additional
collateral.  For  previously-owned homes, the trade-in allowance accepted by the
retailer  must  be consistent with the value of the home as determined by VMF in
light  of  current  market  conditions.  The  value  of real property pledged as
additional  collateral  is estimated by retail personnel, who are not appraisers
but  are  familiar  with the area in which the property is located.  The average
down-payment  for  2000  was  19%  of  the  purchase  price,  while  the minimum
down-payment  for  qualified  buyers  was 5%.  The purchase price includes the
stated  cash  sale price of the manufactured home, sales or other taxes and fees
and  set-up  costs.

The  balance  of  the purchase price is financed using various installment sales
contracts  or  mortgage  instruments  providing  for  a  purchase money security
interest in the manufactured home and a mortgage on any real property pledged as
additional  collateral.  Normally,  the  contracts  provide  for  equal  monthly
payments,  generally over a period of seven to thirty years at fixed or variable
rates  of  interest.  VMF  believes the typical manufactured home purchaser is
primarily sensitive to the amount of the monthly payment and not necessarily to
the underlying interest rate.

The Company offers a bi-weekly payment program  which  provides for 26 payments
per  year,  allowing homebuyers the convenience  of  electronically  drafting
payments from their checking accounts while reducing the overall term of the
loan.  The Company believes that such financing options are attractive to the
customer and improve market acceptance of its homes as well as improve
delinquency and repossession experience.

During  the  last  12  fiscal  years,  VMF  was  the  most significant source of
financing  for purchasers of homes sold by the Company-owned retail centers.  In
fiscal  1988,  VMF originated 5,692 contracts and in fiscal 2000, VMF originated
26,161  contracts.  At  June  30,  2000, VMF was servicing approximately 142,000


                                         5
<PAGE>

contracts  with  an  aggregate dollar amount of $3.9 billion.  VMF originated or
purchased  approximately  130,000  of  these  contracts with an aggregate dollar
amount of $3.7 billion.  The Company expects that VMF will continue to originate
a  significant  portion  of  the  financing  for  purchasers  of  its  homes.

The  volume  of manufactured housing contracts originated by VMF for the periods
indicated  below  and certain other information at the end of such periods is as
follows:

<TABLE>
<CAPTION>
                                                   CONTRACT ORIGINATIONS
                                                     YEAR ENDED JUNE 30,
                                              2000          1999         1998
                                              ----          ----         ----
<S>                                        <C>           <C>           <C>
Principal balance of contacts originated
    (in thousands)                          $982,570     $1,085,484     $801,865
Number of contracts originated                26,161         30,165       24,304
Average contract size                       $ 37,559     $   35,985     $ 32,993
Average interest rate                          10.85%         10.40%       10.51%
</TABLE>

The following table indicates the number of loans (in thousands) serviced by VMF
on  the  dates  indicated:

<TABLE>
<CAPTION>
                                                 LOANS SERVICED (IN THOUSANDS)
                                                       YEAR ENDED JUNE 30,
                                                2000           1999         1998
                                                ----           ----         ----
<S>                                              <C>            <C>          <C>
Originated and purchased loans serviced          130            120          109
Master servicing contracts                        12             15           17
                                                 ---            ---          ---
Total                                            142            135          126
</TABLE>

VMF  FUNDING.  VMF draws on its short-term credit facilities with the Company to
fund  manufactured home loans, while long-term financing is obtained through the
capital  markets.  In  fiscal  2000,  VMF  completed  four  public  offerings of
asset-backed  securities  totaling  $1.3  billion.  In excess of $5.4 billion of
securities  have  been  issued  and  sold  since  1991.

VMF's  capital  market activity, the primary source of permanent funding for its
lending activities, is in the form of asset-backed securities issued through its
special purpose entity.  These securities, which are sold in public markets, are
collateralized  by  manufactured housing receivables which are either originated
or acquired by VMF.  Certain of these receivables are originated and subserviced
by  other  entities.  With  respect  to  the  securitized  pools  that  contain
receivables  originated  or  acquired by other entities, VMF is servicer for all
loans  in the pools, with a subservicing arrangement on some loans originated or
acquired  from  other  entities.

Loans  insured  by the Federal Housing Administration (FHA) or guaranteed by the
Veterans  Administration  (VA)  are  permanently  funded  through the Government
National  Mortgage  Association  (GNMA)  pass-through  program.  Under  the GNMA
program,  installment  sales  contracts are warehoused by VMF and then pooled in
denominations  of  approximately $2,500,000 to collateralize the issuance by VMF
of  securities  guaranteed  by GNMA under the provisions of the National Housing
Act.  Under the GNMA program, VMF retains the servicing of the installment sales
contracts and is responsible for passing through payments under the contracts to
GNMA  security  holders.  During  the  fiscal  year  ended  June  30,  2000, VMF
originated  installment  sales  contracts  eligible for financing under the GNMA
program  having  aggregate principal balances of $138,000.  As of June 30, 2000,
VMF  was  servicing  241 GNMA pools totaling $101 million in principal balances.
Use of FHA financing minimizes the Company's contingent liability for these
installment sales contracts because of the government-insured nature of the
loans.  Accordingly, the Company believes that the use of this form of
financing, for customers who qualify, increases the marketability of its
manufactured  homes.

Certain  of  the agreements related to borrowings include covenants with respect
to  the  Company's  financial  condition and corporate existence.  The  Company
is contingently liable as guarantor on installment  contract  receivables  sold
with recourse.  At June 30, 2000, and 1999, the outstanding principal balances
of  these  receivables  totaled approximately $117 million  and  $164  million,
respectively.  The associated contingent liability is approximately $14 million
and $22 million, respectively.  There were no receivables sold with recourse in
2000,  1999  and  1998.

                                         6
<PAGE>

ACQUIRED  CONTRACTS  AND SERVICING ARRANGEMENTS.  Certain acquired contracts are
originated  by  banks or commercial lenders, and acquired indirectly or directly
by  VMF.  The  acquired contracts are purchased  on  the basis of underwriting
criteria  that  may  be different from and may not be as strict as VMF's
underwriting  criteria.

In  fiscal  1994  and  1998,  VMF  became  the  servicer  of  20,180  and 10,013
manufactured  housing  installment  sales  contracts  with approximate principal
balances  of  $285  million  and $267 million, respectively.  VMF acts solely as
servicer  with  respect  to these contracts and, thus, has no ownership interest
nor contingent liability related to these portfolios.  At June 30, 2000, VMF was
servicing  approximately  12,000  of  these  installment sales contracts with an
approximate  principal  balance  of  $222  million.

DELINQUENCY  AND  REPOSSESSION  EXPERIENCE.  VMF  performs  recordkeeping  and
collection  activities  on  all  loans  that  it originates or purchases through
portfolio  acquisitions.  Although  the  terms  of  the  installment sales
contracts vary according to the financial institutions which purchase the
contracts, most contracts provide that the  failure  to  make a payment as
scheduled is an event of default which gives rise  to  the  right to repossess
the home.  However, generally the Company does not  repossess  the  home until
payments are three months delinquent, unless the borrower does not have apparent
ability to bring payments current, in which case repossession may occur sooner.
The Company generally follows the same policy with respect to loans insured by
the FHA or guaranteed by the VA, although the Company  must  also file a notice
of claim within nine months after default with the  agency  to  preserve  its
rights  under  the  programs.

The  following  table  sets  forth  delinquent  installment sales contracts as a
percentage  of  the  total  number  of  installment sales contracts on which the
Company  provided  servicing  and  was  either contingently liable or owner.  An
account  is  considered  delinquent  if any payment is past-due 30 days or more.

<TABLE>
<CAPTION>
                                                  DELINQUENCY PERCENTAGE AT JUNE 30,
                                                      2000       1999       1998
                                                      ----       ----       ----
<S>                                                   <C>         <C>        <C>
Total delinquencies as percentage of
  contracts outstanding
  All contracts                                       2.19%       2.07%     3.34%
  Contracts originated by VMF                         1.67        1.84      1.98
  Contracts acquired from other institutions          4.88        3.14      8.68
</TABLE>

The  following  table  sets  forth information related to loan loss/repossession
experience  for  all  installment  contract  receivables on which the Company is
either  owner  or  contingently  liable:

<TABLE>
<CAPTION>
                                                         YEAR ENDED JUNE 30,
                                                      2000       1999       1998
                                                      ----       ----       ----
<S>                                                  <C>        <C>        <C>
Net losses as percentage of average
  loans outstanding
     All contracts                                     1.4%       1.4%       0.8%
     Contracts originated by VMF                       1.2%       1.0%       0.8%
     Contracts acquired from other institutions        2.8%       3.7%       1.8%
Number of contracts in repossession
     All contracts                                   2,231      1,857      1,682
     Contracts originated by VMF                     1,774      1,374      1,229
     Contracts acquired from other institutions        457        483        453
Total number of contracts in repossession as
     percentage of total contracts                    1.72%      1.54%      1.54%
</TABLE>

The  Company  pays the unpaid balance of an installment sales contract for which
it  is  liable upon repossession of the home.  The Company believes that as long
as  it  is  able  to sell repossessed homes promptly at satisfactory prices, the
costs associated with remarketing these homes can be mitigated. There can be no
assurance that the Company's future results with respect to the payoff and
resale of repossessed homes will be consistent with its past experience. See
Note 5 to the Consolidated Financial Statements in the Company's Annual  Report
to  Shareholders.

                                         7
<PAGE>

INSURANCE  OPERATIONS.  The  Company  acts  as  agent on physical damage, family
protection,  and  home  buyer  protection  plan  insurance  policies  written by
unaffiliated  insurance  companies  (ceding  companies)  for  purchasers  of its
manufactured  homes.  During  the  fiscal  year ended June 30, 2000, the Company
acted  as  the  agent  on  physical  damage,  family  protection, and home buyer
protection policies on approximately 70%, 57%, and 78%, respectively, of Company
retail  sales.  Physical  damage  and home buyer protection plan policies issued
through  the  Company's  agency  are  reinsured  through Vanderbilt Property and
Casualty  Insurance  Co.,  LTD (VPAC), a wholly-owned subsidiary of the Company.

The family protection insurance policies issued through the Company's agency are
reinsured  through  Vanderbilt  Life  and  Casualty  Insurance Co., LTD, (VLAC),
Midland  States  Life Insurance Company (MSLC) and Eastern States Life Insurance
Company  (ESLC),  which  are  majority-owned  subsidiaries  of  the  Company.

MANUFACTURED  HOUSING  COMMUNITIES

The  Company  owns  and  operates 76 manufactured home communities in 12 states.
These  communities  provide  attractive living environments to residents leasing
sites  for  manufactured homes, many of which are built and sold by the Company.
In  addition,  these  communities  also lease sites to residents who already own
their  homes.  Some  communities  also  lease or rent Company-owned manufactured
homes  and  the  sites.

In fiscal 2000 the Communities group purchased or developed 76 home sites in one
community  and added 384 sites at existing locations, bringing total sites owned
to  20,168  at  June  30, 2000, a 2% increase from the prior year.  See "Item 2.
Properties."  Communities'  overall  revenues  were  up  17.2%  in 2000.  Rental
revenues  rose  8.6%  and  sales increased 28.4%.  The following table lists the
number  of  community sites owned and the aggregate occupancy rate at the end of
the  last  three  fiscal  years:

<TABLE>
<CAPTION>
                                         JUNE 30,
                             2000          1999        1998
                             ----          ----        ----
<S>                         <C>          <C>         <C>
Homes sites owned           20,168       19,708       18,964
Occupancy rate                 75%          73%          72%
</TABLE>

REGULATION

The  Company's  manufactured homes are subject to a number of federal, state and
local  laws.  Construction  of  manufactured housing is governed by the National
Mobile  Home  Construction  and  Safety  Standards  Act  of  1974.  In 1976, the
Department  of Housing and Urban Development (HUD) issued regulations under this
Act  establishing  comprehensive  national  construction  standards.  The  HUD
regulations  cover  all  aspects  of  manufactured  home construction, including
structural  integrity,  fire  safety,  wind  loads  and thermal protection.  The
Company's  manufacturing  facilities  and  the  plans and specifications for its
manufactured  homes have been approved by a HUD-designated inspection agency.  A
HUD-approved  organization  regularly  inspects the Company's manufactured homes
for  compliance during construction.  Failure to comply with the HUD regulations
could  expose  the Company to a wide variety of sanctions, including closing the
Company's  plants.  The  Company  believes the homes it manufactures comply with
all  present  HUD requirements.  In addition, certain components of manufactured
homes  are subject to regulation by the Consumer Product Safety Commission which
is  empowered,  in  certain circumstances, to ban the use of component materials
believed  to  be  hazardous  to health and to require the manufacturer to repair
defects  in  components  in  its  homes.  In  February  1983,  the Federal Trade
Commission  adopted  regulations  requiring  disclosure of a manufactured home's
insulation  specifications.

A  variety  of  laws  affect  the  sale  of  manufactured homes on credit by the
Company.  The  Federal  Consumer  Credit  Protection  Act (Truth-in-Lending) and
Regulation  Z  (issued  by the Board of Governors of the Federal Reserve System)
require  written  disclosure  of  information  relative  to  such  credit sales,
including  the amount of the annual percentage rate and the finance charge.  The
Federal  Fair  Credit  Reporting  Act  also  requires  disclosure  of  certain
information  used  as  a  basis  to  deny  credit.  The  Federal  Equal  Credit
Opportunity  Act  and  Regulation  B  (issued  by  the Board of Governors of the
Federal  Reserve  System)  prohibit  discrimination against any credit applicant
based  on  sex,  marital  status,  race,  color,  religion, national origin, age
(provided  the  applicant  has the capacity to contract), receipt of income from
any public assistance program or the good faith exercise by the applicant of any
right  under  the  Consumer  Credit  Protection  Act.  Regulation  B establishes
administrative requirements for compliance with the Equal Credit Opportunity Act
and, among other things, requires the Company to provide a customer whose credit
request has been denied with a

                                         8
<PAGE>

statement of reasons for the denial.  The Federal Trade  Commission  has
issued or proposed various Trade Regulation Rules dealing with  unfair  credit
practices,  collection efforts, preservation of consumers' claims and  defenses
and  the like.  Installment sales contracts eligible for inclusion in the GNMA
Program are subject to credit underwriting requirements of the FHA or the  VA.

The  movement and use of the Company's manufactured homes are subject to highway
use  laws,  ordinances  and  regulations  of  various  federal,  state and local
authorities.  Such  regulations  may prescribe size and road use limitations and
impose  lower  than  normal  speed  limits  and  various other requirements. The
Company's  manufactured  homes  and  its  development  of  manufactured  housing
communities  are  also  subject  to  local  zoning  and  housing  regulations.

The  Company  is  subject  to  the  Magnuson-Moss Warranty Improvement Act which
regulates  the  descriptions  of  warranties  on  products.  The description and
substance  of  the  Company's  warranties are also subject to a variety of state
laws and regulations. Insurance agency activities are subject to state insurance
laws  and regulations as determined by the particular insurance commissioner for
each  state  in  accordance with the McCarran-Ferguson Act.  Sales practices are
governed at both the federal and state level through various consumer protection
trade  practices  and  public  accommodation  laws  and  regulations.

VPAC  and  VLAC  are  subject  to insurance and other regulations of the British
Virgin Islands.  MSLC and ESLC are subject to insurance and other regulations of
the  Turks  and  Caicos  Islands.

COMPETITION

The  manufactured  housing  industry is highly competitive at the manufacturing,
retail  and finance levels in terms of price, service, delivery capabilities and
product  performance.  There  are  many  firms  in  direct  competition with the
Company.  The  Company  believes it has a competitive advantage over firms which
do  not  have  manufacturing,  retailing  and financing capabilities.  Since the
Company's homes are a form of low-cost housing, they compete with other forms of
such  housing  including  apartments  and conventionally-built and prefabricated
homes.  Some  of  the  Company's  competitors  are  larger  and have significant
financial  resources  while other competitors are quite small in relation to the
size  of  the  Company.  The  capital  requirements  for  entry  into  both  the
manufacturing and retail segments are relatively small, with financing available
to them.  The Company is not able to estimate the total number of competitors in
its  marketing  area.

EMPLOYEES

As  of  June 30, 2000, the Company employed 7,429 persons.  Of these, 2,028 were
employed in retail sales, 4,295 in manufacturing, 538 in financial services, 487
in  communities  and  81 in executive and administrative positions.  The Company
does  not  have  any collective bargaining agreements and considers its employee
relations  to  be  good.

ITEM  2.  PROPERTIES.

The  Company's  Financial  Services operations and executive offices are located
near  Knoxville,  Tennessee  in  a wholly-owned, two-story building with 135,000
square  feet  of  space. The following table sets forth the properties which the
Company  uses for its manufacturing operations and locations of its manufactured
housing communities.  All of the buildings used for manufacturing operations are
constructed  of  fabricated  metal  on  a  concrete  slab.

                                         9
<PAGE>

LOCATION  OF  PROPERTY

<TABLE>
<CAPTION>
                              APPROXIMATE                                          APPROXIMATE
MANUFACTURING  OPERATIONS     SQUARE  FEET            MANUFACTURING OPERATIONS     SQUARE FEET
<S>                              <C>                  <C>                             <C>
Owned by Company                                      Owned by Company
  Arizona                                               Tennessee (continued)
    El Mirage                    123,000                  Ardmore                     100,000
  Georgia                                                 Rutledge                     87,000
    Waycross                     100,000                  Bean Station #1             114,000
  Kentucky                                                Bean Station #2             137,000
    Hodgenville                  130,000                  Andersonville               128,000
  North Carolina                                          White Pine                  137,000
    Henderson                    112,000                Texas
    Oxford                        92,000                  Waco #1                     148,000
    Richfield                    194,000                  Waco #2                      99,000
  Tennessee                                               Bonham                      117,000
    Maynardville                 110,000                  Sulphur Springs             113,000
    Savannah #1                  104,000
    Savannah #2                  109,000             Leased
                                                       Halls, Tennessee                63,000
</TABLE>

<TABLE>
<CAPTION>

                               APPROXIMATE                                           APPROXIMATE
COMMUNITIES                       ACRES             COMMUNITIES                         ACRES
<S>                              <C>                <C>                                  <C>
Owned by Company                                    Owned by Company
  Arizona                                             Tennessee
     El Mirage                      35                    Knoxville (4)                   189
     Glendale                       14                    LaVergne                         76
     Phoenix                        47                    Louisville                       41
  Florida                                                 Millington                       29
     Gainesville (2)               132                    Morristown                       12
     Jacksonville (5)              330                    Maryville (2)                    34
     Kissimmee                      41                    Powell (2)                       69
     Mulberry (2)                   91                    Sevierville                     115
     Princeton                      37                    Smyrna                           26
     Tallahassee                    39                    Tullahoma                        18
  Georgia                                             Texas
     Douglasville (2)               97                    Arlington                        39
  Iowa                                                    Dallas (3)                      130
     Carter Lake                    41                    Denton (3)                      201
  Michigan                                                Fort Worth (4)                  154
     Kalamazoo                     126                    Flower Mound                     18
  Missouri                                                Greeneville                      36
     Independence                   90                    Houston (3)                     153
  North Carolina                                          Humble                           55
     Greensboro                     83                    Little Elm                       86
  Oklahoma                                                Pearland                         45
     Edmond                         37                    San Angelo                       90
     Enid                           20                    San Antonio (5)                 240
     Lawton                         38                    Schertz                          71
     Midwest City                   25                    Wylie (2)                       208
     Norman                         44                 Virginia
     Oklahoma City (2)             116                    Evington                         70
  South Carolina                                          Blacksburg                       38
     Columbia                       97
     Florence (2)                   97
</TABLE>

                                         10
<PAGE>

The  Company-owned  retail  centers  are three to four acre sites with a special
manufactured  office  unit  serving  as  the sales office.  The remainder of the
retail  center  site  is  devoted  to  the  display of homes.  Of the 318 retail
centers,  163  are  owned and 155 occupy leased property.   The Company does not
believe  that  any  individual  retail  sales center property is material to its
overall  business.


All  of  the properties described above are well maintained and suitable for the
purposes  for  which  they  are  being  used.  The  Company  believes  that  its
properties  are  adequate  for  its  near-term  needs.

ITEM  3.  LEGAL  PROCEEDINGS.

No  material  legal  proceedings  are  pending  other  than  routine  litigation
incidental  to  the  business  of the  Company.   The Company believes that such
proceedings  will  not have any material adverse effect on it or its operations.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SHAREHOLDERS.

No  matters were submitted to shareholders during the last quarter of the fiscal
year.

                                         11
<PAGE>

                                     PART II

ITEM  5.  MARKET  FOR  THE  REGISTRANT'S  COMMON  EQUITY AND RELATED STOCKHOLDER
MATTERS.

(a)  The  Company's  Common Stock is traded on the New York Stock Exchange.  The
following  table  sets  forth, for fiscal years 2000 and 1999, respectively, the
range  of  high  and  low  closing sale prices as reported by the New York Stock
Exchange,  Inc.

<TABLE>
<CAPTION>
                                       Fiscal                Fiscal
                                        2000                  1999
                                        ----                  ----
             Quarter Ended         High       Low        High        Low
<S>                               <C>       <C>        <C>        <C>
             September            $11.88     $8.56     $16.35     $12.35
             December              11.94      8.50      13.81      10.80
             March                 10.13      7.81      15.19      10.69
             June                  10.38      7.94      13.25      10.69
</TABLE>


(b)  As  of  August 30, 2000, there were 11,380 holders of record (approximately
52,000  beneficial  holders)  of  the  Company's  Common  Stock.

(c)  It  is  the  policy  of  the  Board of Directors of the Company to reinvest
substantially  all  earnings  in the business.  The Board of Directors initiated
the  payment  of  cash dividends at the November 9, 1994 shareholders meeting of
$.02  per  share  per quarter, amounting to $0.016 per share on a split-adjusted
basis  following  the  December  1998  stock  split. Future dividend policy will
depend  on the Company's earnings, capital requirements, financial condition and
other  factors  considered  relevant  by  the Board of Directors.  Additionally,
certain  of  the  Company's  financing  agreements  have  various covenants that
restrict  payments which may be made for dividends and other stock transactions.

The  following  portions of the Company's 2000 Annual Report to Shareholders are
incorporated  herein by reference (page number references are to Annual Report):

ITEM  6.  SELECTED  FINANCIAL  DATA.
Eleven  Year  Review  on  page  12.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS.
Management's  Discussion  and  Analysis  of  Financial  Condition and Results of
Operations  on  pages  13-15.

ITEM  7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK.
Market  Risk  on  page  15.

ITEM  8.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA.

 -  Quarterly  Results  (unaudited)  on  page  13.
 -  Report  of  Independent  Accountants  on  page  16.
 -  Consolidated  Balance  Sheets  on  page  16.
 -  Consolidated  Statements  of  Income  on  page  17.
 -  Consolidated  Statements  of  Shareholders'  Equity  on  page  17.
 -  Consolidated  Statements  of  Cash  Flows  on  page  18.
 -  Notes  to  the  Consolidated  Financial  Statements  on  pages  19-24.


ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE.
Not  applicable.

                                         12
<PAGE>

                          PART  III
ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT.

EXECUTIVE  OFFICERS  OF  THE  COMPANY

<TABLE>
<CAPTION>
Name                 Age    Position
<S>                  <C>    <C>
Kevin T. Clayton      37    Chief Executive Officer, President, and President, Financial Services (a)

David M. Booth        47    Executive Vice President and President, Retail (b)

Richard D. Strachan   58    Executive Vice President and President, Manufacturing (c)

Allen Morgan          53    Vice President and General Manager, Communities (d)

Amber W. Krupacs      36    Vice President Finance (e)

Greg A. Hamilton      42    Vice President and Controller (f)
</TABLE>

(a)  Mr.  Clayton  has been President of Financial Services since 1995. Prior to
that  time,  he  served  in  various  management positions with the Company.  In
August  1997, he was named President and Chief Operating Officer of the Company.
In  July  1999,  he  was  named  Chief  Executive  Officer.

(b)   Mr.  Booth has been Executive Vice President of the Company since 1997 and
President of Retail since 1995.  Prior to that time, he served as Executive Vice
President  of  Retail  and  in  other  management  positions  with  the Company.

(c)  Mr. Strachan has been Executive Vice President of the Company and President
of Manufacturing since 1998 and President of Manufacturing since 1997.  Prior to
that  time,  he served as Vice President and General Manager of Manufacturing as
well  as  other significant management positions with the Company and within the
industry.

(d)  Prior to joining the Company in 1998, as General Manager of the Communities
Group, Mr. Morgan was Superintendent of Knox County, Tennessee Schools from 1992
to  1998.  In  September  1999,  he  was  named  Vice  President of the Company.

(e)  Ms. Krupacs has been Vice President Finance since 1998.  She joined the
Company  in  December  1993 as Tax Manager. From August 1998 through August
1999,  she  served  as  Secretary.

(f)  Mr.  Hamilton  joined  the Company in February 1997 as Corporate Controller
and was named Vice President and Controller of the Company in August 1998.  From
1984 to 1997, he served in various finance and accounting positions with Philips
Consumer  Electronics  Company.

The  Company's  executive  officers  serve  at  the  pleasure  of  the  Board of
Directors.

All  other  required  information  is incorporated by reference to the Company's
Proxy  Statement  under  the  heading  ELECTION  OF  DIRECTORS.

ITEM  11.  EXECUTIVE  COMPENSATION.
Incorporated  by  reference  to  the Company's Proxy Statement under the heading
COMPENSATION  OF  MANAGEMENT  TABLE.

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT.
Incorporated  by  reference  to the Company's Proxy Statement under the headings
ELECTION  OF  DIRECTORS  and  PRINCIPAL  STOCKHOLDERS;  SECURITY  OWNERSHIP  OF
DIRECTORS  AND  OFFICERS.

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.
Incorporated  by  reference  to  the  Company's  Proxy  Statement.

                                         13
<PAGE>

                                       PART IV

ITEM  14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES,  AND REPORTS ON FORM 8-K.

(a) The  following  documents  are  filed  as  part  of  this  report:

    1. Financial  Statements:  (Included  in  Annual  Report  -  Exhibit  13).

            The  following  Consolidated Financial Statements of Clayton Homes,
            Inc. and its subsidiaries  included  in  Part II, Item 8 are
            incorporated by reference to the 2000  Annual  Report  to
            Shareholders  for  the  year  ended  June  30,  2000.

            Report  of  Independent  Accountants.

            Consolidated  Balance  Sheets  -  June  30,  2000  and  1999.

            Consolidated  Statements  of  Income  - years ended June 30, 2000,
            1999 and 1998.

            Consolidated  Statements  of  Shareholders'  Equity - years ended
            June 30, 2000, 1999  and  1998.

            Consolidated  Statements  of  Cash  Flows  - years ended June 30,
            2000, 1999 and 1998.

            Notes  to  the  Consolidated  Financial  Statements.

    3. Exhibits:

       3.  (a)  Restated  charter  as  amended.  (E)

           (b)  Bylaws.  (G)

       4.  (a)  Specimen  stock  certificates.  (G)

           (b)  The  Company  agrees  to  furnish  to  the  Commission,  upon
                request, instruments  relating  to the long term debt of the
                Company or its subsidiaries.

      10.  (a)  Lease  Agreement,  dated June 29, 1972, as amended, between
                Clayton Homes, Inc. and Dean Planters Warehouse, Inc. (A)
                (subsequently assigned to CLF,  a  limited  partnership  which
                includes  a  related  party).

          *(b)  Clayton  Homes, Inc. 1983  Stock  Option  Plan.  (A)

          *(c)  Clayton  Homes, Inc. 1985  Stock  Option  Plan.  (C)

          *(d)  1991  Employees Stock Option  Plan.  (D)

          *(e)  Clayton  Homes, Inc. 1997 Employees Stock Incentive Plan. (F)

          *(f)  Director's  Equity  Plan.  (G)

          *(g)  Director's  Equity  Plan.  (G)

          *(h)  Director's  Equity  Plan.  (H)

          *(i)  1996  Outside  Directors  Equity  Plan.  (E)

                                         14
<PAGE>

      13. Annual Report to Shareholders for year ended  June  30,  2000. (B)

      21. List  of  Subsidiaries  of  the  Registrant  (filed  herewith).

      23. Consent  of  independent  accountants  (filed  herewith).

      27. Financial  Data  Schedule  (for  SEC  use  only).
________________________________________________________________

(A) Filed  as  Exhibits  to Registration Statement on Form S-1 (SEC File No.
    2-83705)  and  incorporated  by  reference  thereto.

(B) For  the  information  of  the  Commission only, except to the extent of
    portions  specifically  incorporated  by  reference.

(C) Filed with Registration Statement on Form S-8 (SEC File No. 33-7156) and
    incorporated  by  reference  thereto.

(D) Filed  with  Registration Statement on Form S-8 (SEC File No. 333-83565)
    and  incorporated  by  reference  thereto.

(E) Filed  with  the  Company's  Proxy  Statement  for the Annual Meeting of
    Shareholders held November 14, 1996, and incorporated by reference thereto.

(F) Filed  with  the  Company's  Proxy  Statement  for the Annual Meeting of
    Shareholders held November 12, 1997, and incorporated by reference thereto.

(G) Filed  with  the  Company's  Form 10K for the fiscal year ended June 30,
    1998,  and  incorporated  by  reference  thereto.

(H) Filed  with  the  Company's  Form 10K for the fiscal year ended June 30,
    1999,  and  incorporated  by  reference  thereto.

*   Management  and  Director's  Compensation  plans.

________________________________________________________________

(b) Reports  on  Form  8-K.
    Clayton  Homes,  Inc./Vanderbilt  Mortgage  &  Finance,  Inc. Senior
    Subordinate Pass-Through  Certificates  Series 2000B.  Filed May 18, 2000,
    and May 26, 2000.

                                         15
<PAGE>







                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) 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, in the City of Alcoa,
State  of  Tennessee,  on  September  20,  2000.

                                 CLAYTON  HOMES,  INC.

                                 By:      /s/  Kevin  T.  Clayton
                                          ------------------------
                                          Kevin  T.  Clayton
                                          Chief  Executive  Officer,  President
                                          and  President,  Financial  Services

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been  signed  by  the  following persons in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
<S>                      <C>                   <C>
/s/ James L. Clayton     September 20, 2000    Chairman of the Board
---------------------
James L. Clayton


/s/ Kevin T. Clayton    September 20, 2000     Chief Executive Officer, President
---------------------                          and President, Financial Services
Kevin T. Clayton                               (Principal Executive Officer)


/s/ Amber W. Krupacs    September 20, 2000     Vice President Finance
---------------------
Amber W. Krupacs


/s/ Greg A. Hamilton    September 20, 2000     Vice President and Controller
---------------------
Greg A. Hamilton


/s/ B. Joe Clayton      September 20, 2000     Director
---------------------
B. Joe Clayton


/s/ Dan W. Evins        September 20, 2000     Director
---------------------
Dan W. Evins


/s/ Wilma H. Jordan     September 20, 2000     Director
---------------------
Wilma H. Jordan


/s/ John J. Kalec       September 20, 2000     Director
---------------------
John J. Kalec


/s/ Thomas N. McAdams   September 20, 2000     Director
---------------------
Thomas N. McAdams


/s/ C. Warren Neel      September 20, 2000     Director
---------------------
C. Warren Neel
</TABLE>

                                         16