FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

x QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 1998

                                       OR

o 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: 333-42213


                               NEWMARK HOMES CORP.
             (Exact name of Registrant as specified in its charter)

Nevada                                                       76-0460831
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

1200 Soldiers Field Drive
Sugar Land,   TX     77479

(Address of principal executive offices)  (Zip code)

                                  281-243-0100
               (Registrant's telephone number including area code)

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

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Indicate by check mark whether the  registrant  has filed all documents
and reports  required  to be filed by Section 12, 13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes ____ No ____

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

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

Title                                                        Outstanding

Common Stock                                                 11,500,000 shares




                                       1
<PAGE>




                               NEWMARK HOMES CORP.
                                      INDEX
                                                                          Page

PART I.      FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

             Condensed Consolidated Balance Sheet                          3
             Condensed Consolidated Statement of Operations                4
             Condensed Consolidated Statement of Stockholders' Equity      6
             Condensed Consolidated Statement of  Cash Flows               7
             Notes to the Condensed Consolidated Financial Statements      8

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS.                  12

ITEM 3.       CHANGES IN INFORMATION ABOUT MARKET RISK - None.            16

PART II.       OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS - None.                                   17

ITEM 2.       CHANGE IN SECURITIES - None                                 17

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES - None.                     17

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF                          17
              SECURITY HOLDERS - None.

ITEM 5.       OTHER INFORMATION - None.                                   17

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K                            17

              Exhibits
              Exhibit 27 - Financial Data Schedule

              Reports on  Form 8-K
              The  registrant  filed no  reports  on Form 8-K  during  the
              quarter ended September 30, 1998.

SIGNATURE                                                                 17




                                       2
<PAGE>


Part I.  Financial Information

Item 1.  Financial Statements

<TABLE>
<CAPTION>

                      NEWMARK HOMES CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except share amounts)


                                 ASSETS                                      September 30,          December 31, 1997
                                                                                 1998
                                                                          --------------------     --------------------
                                                                              (unaudited)
<S>                                                                                <C>                    <C>
Cash                                                                               $    3,136             $        746
Receivables..........................................................                   7,397                    1,729
Inventory............................................................                 187,548                  103,010
Investment in unconsolidated subsidiaries ...........................                     261                      327
Other assets, net ...................................................                   8,280                    5,854
Goodwill, net of accumulated amortization of $4,818 and $3,773 in                                 
     1998 and 1997, respectively ....................................                  37,100                   27,547
                                                                          --------------------     --------------------
Total assets.........................................................              $  243,722             $    139,213
                                                                          ====================     ====================


                  LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans payable ..........................................              $  107,557             $     66,100
Acquisition notes payable............................................                  15,541                    -----
Other payables to affiliates ........................................                   1,065                    1,775
Accounts payable and accrued liabilities.............................                  21,551                   10,963
Other liabilities ...................................................                  12,396                    4,684
                                                                          --------------------     --------------------
Total liabilities ...................................................                 158,110                   83,522
                                                                          --------------------     --------------------


Stockholders'equity:               
     Common  stock -- $.01 par value; 30,000,000 shares authorized, 
     9,200,000 at December 31, 1997, and 11,500,000
     at September 30, 1998, issued and outstanding ..................                     115                       92
     Additional paid-in capital......................................                  73,768                   52,165
     Retained earnings...............................................                  11,729                    3,434
                                                                          --------------------     --------------------
Total stockholders'equity ...........................................                  85,612                   55,691



                                                                          --------------------     --------------------
Total liabilities and stockholders'equity ...........................              $  243,722              $   139,213
                                                                          ====================     ====================

<FN>
                    See accompanying notes to the condensed
                       consolidated financial statements.
</FN>
</TABLE>





                                       3
<PAGE>


<TABLE>
<CAPTION>

                       NEWMARK HOMES CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except share amounts)
                                   (unaudited)



                                                                               Three Months
                                                                            Ended September 30,
                                                                           ---------------------
                                                                          1998                 1997
                                                                          ----                 ----
<S>                                                                    <C>                   <C>
Revenues.............................................................  $ 112,907             $ 61,507
Cost of sales  ......................................................     93,900               50,256
                                                                          ------               ------

Gross profit.........................................................     19,007               11,251
Equity in earnings from unconsolidated subsidiaries  ................        262                  154
Selling, general and administrative expenses.........................    (12,055)              (6,998)
Depreciation and amortization........................................     (1,163)                (402)
                                                                          -------              -----
     Operating income ...............................................      6,051                4,005
Other income (expense):
Interest expense ....................................................       (419)                (701)
Other income, net ...................................................        510                   85
                                                                             ---                   --

Income before income taxes ..........................................      6,142                3,389
Income taxes ........................................................      2,301                1,325
                                                                           -----                -----

Net income ..........................................................  $   3,841            $   2,064
                                                                        =========            =========






Earnings per common share:                                                                                    
Basic ...............................................................     $ .33                $ .22
                                                                          =====                =====
Diluted .............................................................     $ .33                $ .22
                                                                          =====                =====
Weighted average number of shares of common                                                                   
     stock equivalents outstanding:                                                                           
Basic ............................................................... 11,500,000           9,200,000
                                                                      ==========           =========
Diluted ............................................................. 11,613,667           9,200,000
                                                                      ==========           =========
<FN>
                    See accompanying notes to the condensed
                       consolidated financial statements.
</FN>
</TABLE>



                                       4
<PAGE>


<TABLE>
<CAPTION>

                      NEWMARK HOMES CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except share amounts)
                                   (unaudited)



                                                                                 Nine Months
                                                                             Ended September 30,
                                                                             ---------------------
                                                                          1998                  1997
                                                                          ----                  ----
<S>                                                                    <C>                  <C>
Revenues.............................................................  $ 285,160            $ 162,304
Cost of sales  ......................................................    238,022              132,335
                                                                         -------              -------

Gross profit.........................................................     47,138               29,969
Equity in earnings from unconsolidated subsidiaries  ................        602                  262
Selling, general and administrative expenses.........................    (31,199)             (19,121)
Depreciation and amortization........................................     (2,673)              (1,224)
                                                                          -------              -------
     Operating income ...............................................     13,868                9,886
Other income (expense):
Interest expense ....................................................     (1,558)              (1,524)
Other income, net ...................................................        962                  421
                                                                            ----                 ---

Income before income taxes ..........................................     13,272                8,783
Income taxes ........................................................      4,977                3,434
                                                                           -----                -----

Net income ..........................................................    $ 8,295           $    5,349
                                                                       =========            ==========






Earnings per common share:                                                                                    
Basic ...............................................................     $ .76                $ .58
                                                                          =====                =====
Diluted .............................................................     $ .76                $ .58
                                                                          =====                =====
Weighted average number of shares of common                                                                   
     stock equivalents outstanding:                                                                           
Basic ............................................................... 10,878,755           9,200,000
                                                                      ==========           =========
Diluted ............................................................. 10,954,949           9,200,000
                                                                      ==========           =========

<FN>
                    See accompanying notes to the condensed
                       consolidated financial statements.
</FN>
</TABLE>




                                       5
<PAGE>


<TABLE>
<CAPTION>

                      NEWMARK HOMES CORP. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (In thousands)
                                   (unaudited)


                                                                   Additional                   
                                                    Common           paid-in       Retained     
                                                      Stock          Capital       earnings        Total
                                                    -----------    ------------    ----------    -----------
<S>                                                        <C>     <C>              <C>          <C>
Balance, December 31, 1996 ..................              $92     $42,415          $1,422       $43,929
Capital contribution.........................                          124                           124
Dividends paid   ............................                         (162)         (3,109)       (3,271)
Net income...................................                                        5,349         5,349
                                                    -----------    ------------    ----------    -----------
Balance, September 30, 1997..................              $92     $42,377          $3,662       $46,131
                                                    ===========    ============    ==========    ===========





Balance, December 31, 1997 ..................              $92     $52,165          $3,434       $55,691
Initial  public  offering  of  common  stock,                                                      
net of issuance costs                                                          
of $2,554,000, March 13, 1998 ...............               20      18,426                        18,446

Issuance of common stock due to the exercise                                           
of underwriters over-allotment option, net of                                              
issuance costs of $271,000, April 3, 1998....                3       2,876                         2,879

Capital contribution.........................                          301                           301
Net income...................................                                        8,295         8,295
                                                    -----------    ------------    ----------    -----------
Balance, September 30, 1998..................            $ 115     $73,768         $11,729       $85,612
                                                    ===========    ============    ==========    ===========


<FN>
                     See accompanying notes to the condensed
                       consolidated financial statements.
</FN>
</TABLE>




                                       6
<PAGE>

<TABLE>
<CAPTION>

                       NEWMARK HOMES CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
                                                                                     Nine Months
                                                                                 Ended September 30,
                                                                               -----------------------
                                                                              1998                 1997
                                                                          --------------       -------------
<S>                                                                       <C>                  <C>
Net Income .........................................................      $   8,295            $  5,349
   Adjustments to reconcile net income to net cash used in operating                                        
     activities:                                                                                            
     Depreciation and amortization..................................          2,673               1,224
     Net (gain) loss on sale of property, premises and equipment.....            25                   4
     Equity in earnings from unconsolidated subsidiaries............           (602)               (261)
     Changes in operating assets and liabilities, net  of effects                                           
     from purchase of Westbrooke Communities Inc.:                                                                    
         Inventory and land held for development, net...............        (43,778)            (11,178)
         Receivables................................................         (4,128)             (1,184)
         Other assets ..............................................          1,666                (796)

         Payable to affiliates......................................           (710)              1,034
         Accounts payable and accrued liabilities...................          1,547               1,873

         Other liabilities..........................................          7,710                 765
                                                                          --------------       -------------
         Net cash used in operating activities  ....................        (27,302)             (3,170)
                                                                          --------------       -------------
Cash flows from investing activities:
   Proceeds from maturing certificate of deposit ...................          -----               1,000
   Purchases of property, premises and equipment ...................         (1,544)             (1,635)
   Proceeds from sale of property, premises and equipment ..........          -----                  40
   Increase in Goodwill ............................................           (444)                (42)
   Cash acquired in purchase of Westbooke Communities Inc. .........          3,618                -----
   Investment in unconsolidated subsidiaries .......................          -----                (944)
   Distributions from unconsolidated subsidiaries ..................            668               1,585
                                                                          --------------       -------------
         Net cash provided by (used in) investing activities .......          2,298                   4

Cash flows from financing activities:
   Net proceeds from initial public offering of common stock........         18,446                -----
   Net proceeds from Underwriters over-allotment option ............          2,879                -----
   Capital contributions received ..................................            301                 124
   Dividends paid ..................................................          -----              (3,271)
   Proceeds from advances on construction loans payable ............        207,685             109,979
   Principal payments on construction loans payable ................       (188,536)           (109,726)
   Principal payments on acquisition notes payable..................        (13,381)              -----
   Proceeds from advances on notes payable to affiliate.............          -----               6,811
   Principal payments on notes payable to affiliate ................          -----              (1,365)
                                                                          --------------       -------------
         Net cash provided by financing activities..................         27,394               2,552
                                                                          --------------       -------------
Increase (decrease) in cash ........................................          2,390                (614)
Cash, beginning of period ..........................................            746                 642
                                                                          --------------       -------------
Cash, end of period ................................................      $   3,136            $     28
                                                                          ==============       =============
Supplemental disclosures of cash flow information:
   Cash paid for:                                                                                           
     Interest ......................................................      $   6,876            $  4,711
                                                                          ==============       =============
     Income taxes ..................................................      $   6,391            $  3,028
                                                                          ==============       =============
<FN>
          See  accompanying  Note  2 for  supplemental  disclosure  of  non-cash
          investing  and financing  activities.  See  accompanying  notes to the
          condensed consolidated financial statements.
</FN>
</TABLE>

                                       7
<PAGE>

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




Note 1.       Summary of Significant Accounting Policies

Organization

Newmark  Homes  Corp.  and  subsidiaries   (the  Company)  is  a  majority-owned
subsidiary  of Pacific  Realty Group and  ultimately a subsidiary of Pacific USA
Holdings  Corp.  (PUSA).  The Company was formed in December  1994 to serve as a
real estate holding company.

The Company's primary subsidiaries are as follows:
<TABLE>
<CAPTION>
                   Subsidiary                                         Nature of Business
<S>                                                <C>
Newmark Home Corporation (Newmark) .........       Single-family   residential  homebuilding  in  Texas,
                                                   Tennessee and North Carolina - formed in 1983.
Westbrooke Communities, Inc. (Westbrooke)          Single-family   residential   homebuilding   in   Florida
                                                   -formed in 1976.
The Adler Companies, Inc. (Adler) ..........       Single-family   residential   homebuilding   in   Florida
                                                   -formed in 1990.
Pacific United Development Corporation             Residential   lot  development  in  Texas  and  Tennessee
(PUDC)......................................       -formed in 1993.
                                        
</TABLE>

Basis of Presentation

The consolidated  financial  statements  include the accounts of the Company and
its subsidiaries.  The accounting and reporting  policies of the Company conform
to generally  accepted  accounting  principles and general  practices within the
homebuilding  industry.  All significant  intercompany balances and transactions
have been eliminated in the consolidated financial statements.

The preparation of financial  statements in accordance  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

Interim presentation

The accompanying  condensed consolidated financial statements have been prepared
by the Company and are unaudited.  Certain information and footnote  disclosures
normally included in financial statements presented in accordance with generally
accepted   accounting   principles  have  been  omitted  from  the  accompanying
statements.  The Company's management believes the disclosures made are adequate
to make  the  information  presented  not  misleading.  However,  the  financial
statements should be read in conjunction with the financial statements and notes
thereto of the Company for the year ended December 31, 1997 which were a part of
the Company's Registration Statement on Form S-1 (Commission File No. 333-42213)
that was declared effective March 12, 1998.




                                       8
<PAGE>


Earnings per share

In March 1997, the Financial  Accounting  Standards  Board issued  Statements of
Financial  Accounting  Standards  No. 128,  "Earnings Per Share" (SFAS No. 128).
This Statement  establishes new standards for computing and presenting  earnings
per  share  (EPS).  SFAS No.  128  replaces  the  presentation  of  primary  EPS
previously prescribed by Accounting Principles Board Opinion No. 15 (APB No. 15)
with a presentation of basic EPS which is computed by dividing income  available
to  common  stockholders  by  the  weighted-average   number  of  common  shares
outstanding for the period.

SFAS No. 128 also requires dual  presentation of basic and diluted EPS.  Diluted
EPS is computed similarly to fully diluted EPS pursuant to APB No. 15.

The following  tables reconcile the computation of basic and diluted EPS for the
three  months  ended  September  30, 1998 and 1997 and for the nine months ended
September 30, 1998 and 1997.
<TABLE>
<CAPTION>

                                   Three Months Ended September 30, 1998             Three Months Ended September 30, 1997
                                ---------------------------------------------    ----------------------------------------------
                                  Income          Shares         Per Share        Income            Shares        Per Share
                               (Numerator)     (Denominator)      Amount       (Numerator)      (Denominator)       Amount
                              ---------------------------------------------------------------- --------------------------------
<S>                               <C>               <C>                 <C>        <C>                <C>                 <C>
Basic EPS:
      Income available to                                                                                        
      common shareholders         $3,841,000        11,500,000          $.33       $2,064,000         9,200,000           $.22
                                                               ==============                                   ===============

Effect of Dilutive Securities
      1998  Tandem Stock                                                                                                       
      Option Plan                      -----           113,667                          -----             -----                
                              ---------------------------------              ----------------- -----------------

Diluted EPS:
      Income available to                                                                                        
      common shareholders +
      assumed conversions         $3,841,000        11,613,667          $.33       $2,064,000         9,200,000           $.22
                                                               ==============                                   ===============

</TABLE>

<TABLE>
<CAPTION>

                                   Nine Months Ended September 30, 1998            Nine Months Ended September 30, 1997
                              -------------------------------------------------------------------------------------------------

                                  Income          Shares         Per Share        Income             Shares        Per Share
                               (Numerator)     (Denominator)      Amount        (Numerator)      (Denominator)       Amount
                              ----------------------------------------------------------------- ----------------- -------------
<S>                               <C>               <C>                 <C>         <C>                <C>                <C>
Basic EPS:
      Income available to                                                                                          
      Common shareholders         $8,295,000        10,878,755          $.76        $5,349,000         9,200,000          $.58
                                                               ==============                                     =============

Effect of Dilutive Securities
      1998  Tandem Stock                                                                                                       
      Option Plan                      -----            76,194                           -----             -----               
                              ---------------------------------              ------------------ -----------------

Diluted EPS:
      Income available to
      common shareholders +
      assumed conversions         $8,295,000        10,954,949          $.76        $5,349,000         9,200,000          $.58
                                                               ==============                                     =============
</TABLE>





                                       9
<PAGE>


Note 2.       Acquisitions

Effective  January 1, 1998, the Company acquired all of the outstanding stock of
Westbrooke and its affiliated  entities,  a single-family  home builder in South
Florida. The initial purchase price for Westbrooke was $18.9 million in the form
of promissory  notes.  ($12.3 million of notes payable bearing interest at 6.45%
payable  annually  over  five  years and a $6.6  million  note  payable  bearing
interest  at 9.0% due on or before one year from  closing.)  In  addition to the
promissory notes, the purchase  agreement requires the Company to pay additional
consideration  of  up to  $7.5  million  contingent  upon  Westbrooke  achieving
specified income targets over the next five years.

The following unaudited pro forma financial information for the three months and
nine  months  ended  September  30,  1997  is  presented  as if  the  Westbrooke
acquisition  had occurred on January 1, 1997  (dollars in  thousands).  This pro
forma  financial  information  does  not  necessarily  reflect  the  results  of
operations as if they had occurred or the results that may occur in the future.

<TABLE>
<CAPTION>
                                                                  Three Months Ended        Nine Months Ended
                                                                  September 30, 1997       September 30, 1997
                                                                  ------------------       -------------------- 
<S>                                                                     <C>                     <C>     
Revenues.............................................................   $88,975                 $227,486
Cost of sales  ......................................................    74,805                  189,797
                                                                         ------                  -------

Gross profit.........................................................    14,170                   37,689
                                                                         ------                   ------
                                                                        $ 2,594                 $  6,380
          Net income ................................................   =======                    =====

Earnings per common share:                                                                                       
     Basic ..........................................................   $   .28                 $    .69
                                                                           ====                     ====
Weighted average number of shares of common                                                                      
     stock equivalents outstanding:                                                                              
     Basic .......................................................... 9,200,000                9,200,000
                                                                      =========                =========
</TABLE>


Note 3.       Inventory

The  inventory  as of September  30, 1998 and December 31, 1997  consists of the
following:
<TABLE>
<CAPTION>
                                                                                              Carrying value
                                                    Number of homes                           (in thousands)
                                         --------------------------------------    -------------------------------------
                                          September 30,         December 31,        September 30,        December 31,
                                               1998                 1997                1998                 1997
                                         -----------------    -----------------    ----------------     ----------------
<S>                                                   <C>                   <C>            <C>                  <C>    
Completed  ..................................         130                   90             $25,078              $18,564
Under construction  .........................         973                  444             101,819               48,352
Models  .....................................          87                   40              16,275                8,490
Residential lots.............................       -----                -----              43,904               27,141
Land held for development....................       -----                -----                 472                  463
                                         -----------------    -----------------    ----------------     ----------------
               Total                                1,190                  574            $187,548             $103,010
                                         =================    =================    ================     ================

</TABLE>







                                       10
<PAGE>


Note 4.       Capitalized Interest

A summary of interest capitalized in inventory is as follows (in thousands):
<TABLE>
<CAPTION>

                                                    Three Months Ended            Nine Months Ended
                                                      September 30,                 September 30,
                                                --------------------------- -- -------------------------
                                                   1998               1997          1998           1997
                                                ------------    -----------    ----------     ----------
<S>                                                <C>              <C>           <C>            <C>   
Interest capitalized, beginning of period ....     $5,542           $2,067        $2,572         $1,494
Capitalized    interest    acquired   in   the
purchase of Westbrooke .......................      -----            -----         2,597          -----
Interest incurred ............................      2,690            1,846         7,859          4,861
Less interest included in:
      Cost of sales ..........................      2,412              965         6,069          2,584
      Other (income) expense .................        419              701         1,558          1,524
                                                 -----------    -----------     ---------     ----------
Interest capitalized, end of period ..........     $5,401           $2,247        $5,401         $2,247
                                                ============    ===========    ==========     ==========

</TABLE>

Note 5.       Commitments and Contingencies

The Company is subject to certain  pending or  threatened  litigation  and other
claims.  Management,  after review and consultation with legal counsel, believes
the Company has  meritorious  defenses to these  matters and that any  potential
liability  from  these  matters  would  not  materially   affect  the  Company's
consolidated financial statements.




                                       11
<PAGE>



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

This Quarterly Report on Form 10-Q may contain forward-looking statements within
the  meaning of Section  27A of the  Securities  Act of 1933,  as  amended,  and
Section 21E of the Securities  Exchange Act of 1934, as amended.  Actual results
could differ materially from those projected in the  forward-looking  statements
as a result of the risk factors set forth below.

Results of Operations

The  following  tables set forth certain  operating  and financial  data for the
Company:

<TABLE>
<CAPTION>
                              New sales contracts,                                                        
                              net of cancellations            Home closings                               
                             ------------------------
                                                         -------------------------
                                  Three Months                 Three Months                               
                               Ended September 30,         Ended September 30,                            
                             ------------------------    -------------------------
                                    1998        1997           1998          1997
                                    ----        ----           ----          ----

<S>                                  <C>          <C>           <C>           <C>
Houston                              124          90            148           117
Austin                               119          75            110            74
Dallas                                47          43             42            33
Nashville                             20           0              8             0
South Florida                        180          35            200            43
                                    ----        ----           ----          ----

Total                                490         243            508           267
                                    ====        ====           ====          ====

</TABLE>
<TABLE>
<CAPTION>

                              New sales contracts,                                            Homes in
                              net of cancellations            Home closings                 sales backlog
                             ------------------------    -------------------------     ------------------------
                                   Nine Months                 Nine Months                      As of
                               Ended September 30,         Ended September 30,              September 30,
                             ------------------------    -------------------------     ------------------------
                                     1998       1997           1998          1997             1998        1997
                                     ----       ----           ----          ----             ----        ----
<S>                                   <C>        <C>            <C>           <C>              <C>          <C>
Houston                               456        301            349           283              204          88
Austin                                385        253            297           234              173          91
Dallas                                143        117            116            97               69          48
Nashville                              40          0             14             0               26           0
South Florida                         618         86            546           117              439          66
                                      ---         --            ---           ---              ---          --

Total                               1,642        757          1,322           731              911         293
                                    =====        ===          =====           ===              ===         ===

</TABLE>





                                       12
<PAGE>



<TABLE>
<CAPTION>

                                                     As a Percentage of Revenue            As a Percentage of Revenue
                                                                 Three Months                         Nine Months
                                                             Ended September 30,                  Ended September 30,
                                                     ------------------------------------- ----------------------------------
                                                           1998              1997              1998               1997
                                                           ----              ----              ----               ----
<S>                                                       <C>               <C>                <C>               <C>  
Cost of sales                                             83.2%             81.7%              83.5%             81.5%
Gross profit                                              16.8%             18.3%              16.5%             18.5%
Selling, general and administrative expenses              10.7%             11.4%              10.9%             11.8%
Income before income taxes                                 5.4%              5.5%               4.7%              5.4%
Income taxes (1)                                          37.5%             39.1%              37.5%             39.1%
Net income                                                 3.4%              3.4%               2.9%              3.3%

<FN>
(1) As a percent of income before income taxes.
</FN>
</TABLE>


Three Months Ended  September 30, 1998 Compared to Three Months Ended  September
30, 1997.

Revenues for the three months ended  September 30, 1998,  increased by 83.6%, to
$112.9 million, from $61.5 million for the comparable period of 1997. The number
of homes  closed  by the  Company  increased  by 90.3% to 508 homes in the three
months  ended  September  30, 1998 from 267 homes in the same period of 1997.  A
slowdown in construction  in southern  Florida caused by the threat of Hurricane
Georges  affected third quarter  revenue and earnings,  delaying the closings of
approximately 20 homes. The increases in both revenues and homes closed were due
in part to the  acquisition  of  Westbrooke in January 1998. In the three months
ended September 30, 1998,  Westbrooke  closed 160 homes,  with revenues totaling
$27.9 million. Westbrooke comprised 31.5% of the homes closed in the period, and
24.7% of the revenues  generated.  Excluding  Westbrooke,  revenues increased by
38.2%, to $85 million in the three months ended September 30, 1998.

The average  selling  price of homes closed in the three months ended  September
30, 1998 was  $221,797,  a decrease of 3.4% from  $229,557  selling price in the
comparable  period of 1997.  Westbrooke's  average  selling  price was $174,262.
Excluding  Westbrooke,  the average  selling price for homes closed in the three
months ending September 30, 1998 was $243,652, an increase of 6.1%.

New net sales  contracts  increased  101.6%,  to 490 homes for the three  months
ended  September 30, 1998,  from 243 homes for the three months ended  September
30, 1997. The dollar amount of new net sales contracts increased 106%, to $108.2
million.  Westbrooke  had 112 home sales  contracts  during the current  period.
Excluding Westbrooke,  sales contracts were 378 homes in the current three-month
period, a 55.6% increase over 1997.

The Company was operating in 60 subdivisions at September 30, 1998,  compared to
46  subdivisions  at September 30, 1997.  At September  30, 1998,  the Company's
backlog of sales  contracts was 911 homes,  a 210.9%  increase  over  comparable
figures at September 30, 1997. At September 30, 1998,  Westbrooke  had 289 homes
in sales backlog. Excluding Westbrooke, the sales backlog at September 30, 1998,
was 622 homes, a 112.3% increase over 1997.

Cost of sales  increased  by 86.8%,  to $93.9  million in the three months ended
September 30, 1998,  from $50.3 million in the  comparable  period of 1997.  The
increase  was  attributable  to the increase in  revenues.  As a  percentage  of
revenues, cost of sales for the quarter increased to 83.2% in 1998 from 81.7% in
1997. The increase in cost of sales as a percentage of revenues is due primarily
to the  acquisition of Westbrooke.  Generally,  the margins on the homes sold in
South  Florida  will carry  lower  margins due to the impact of higher land cost
relative to sales price. Excluding Westbrooke, as a percentage of revenues, cost
of sales decreased slightly to 81.1% in 1998 from 81.7% in 1997.




                                       13
<PAGE>


Selling,  general and administrative (SG&A) expense increased by 72.3%, to $12.1
million in the three months  ended  September  30, 1998,  from $7 million in the
comparable  period of 1997. As a percentage of revenues,  SG&A expense decreased
slightly  to 10.7% in 1998,  from  11.4%  in 1997.  Excluding  Westbrooke,  SG&A
expense  increased by 52.9% to $10.7  million.  This  increase was caused by the
expansion into Nashville, Tennessee as well as the growth in the Company's Texas
markets as  reflected in the 38.2%  increase in revenues  for the third  quarter
1998 and the 112.3%  increase in the backlog at the end of September 1998 versus
September 1997. Both numbers exclude Westbrooke's results.

Interest  expense  amounted to $419,000 in the three months ended  September 30,
1998, compared to $701,000 in the comparable period of 1997. The Company follows
a policy of  capitalizing  interest  only on  inventory  under  construction  or
development.  During the three months  ended  September  30, 1998 and 1997,  the
Company  expensed a portion of incurred  interest and other  financing  costs on
those  completed  homes held in  inventory.  This expense  decreased  due to the
decrease in the average  number of  completed  homes held in  inventory  for the
quarter ending  September 30, 1998 compared to the quarter ending  September 30,
1997.  Capitalized  interest and other  financing  costs are included in cost of
sales at the time of home closings.

The Company's  provision for income taxes  decreased as a percentage of earnings
before taxes to 37.5% for the three months ended September 30, 1998, compared to
39.1% for the three months ended  September  30,  1997.  Under a tax  allocation
agreement  with Pacific  USA,  the Company is required to calculate  its federal
corporate  income tax  liability  as if it filed a separate  federal  income tax
return for each period and to pay  Pacific  USA the sum which would  result from
such calculation if the Company were subject to federal corporate income tax and
filed a separate tax return.  The Company  recognized federal income tax expense
under the tax  allocation  agreement  amounting  to $2.2  million  for the three
months ended  September  30, 1998  compared to $1.3 million for the three months
ended September 30, 1997.

Net  income  increased  by 86.1% to $3.8  million  for the three  months  ending
September  30,  1998 from $2.1  million  for the  corresponding  period in 1997.
Westbrooke  comprised  15.9%  of the net  income  for the  three  months  ending
September 30, 1998.

Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997.

Revenues for the nine months ended  September 30, 1998,  increased by 75.7%,  to
$285.2  million,  from $162.3  million for the  comparable  period of 1997.  The
number of homes  closed by the Company  increased  by 80.8% to 1322 homes in the
nine months ended  September 30, 1998 from 731 homes in the same period of 1997.
A slowdown in construction in southern Florida caused by the threat of Hurricane
Georges  affected third quarter  revenue and earnings,  delaying the closings of
approximately 20 homes. The increases in both revenues and homes closed were due
in part to the  acquisition  of  Westbrooke  in January 1998. In the nine months
ended September 30, 1998,  Westbrooke  closed 457 homes,  with revenues totaling
$79.1 million. Westbrooke comprised 34.6% of the homes closed in the period, and
27.7% of the revenues  generated.  Excluding  Westbrooke,  revenues increased by
27%, to $206 million in the nine months ended September 30, 1998.

The average selling price of homes closed in the nine months ended September 30,
1998 was  $214,466,  a  decrease  of 2.5%  from  $219,855  selling  price in the
comparable  period of 1997.  Westbrooke's  average  selling  price was $173,123.
Excluding  Westbrooke,  the average  selling  price for homes closed in the nine
months ending September 30, 1998 was $236,309, an increase of 7.5%.

New net sales  contracts  increased  116.9%,  to 1642 homes for the nine  months
ended September 30, 1998, from 757 homes for the nine months ended September 30,
1997. The dollar amount of new net sales contracts  increased  122.5%, to $354.3
million.  Westbrooke  had 434 home sales  contracts  during the current  period.
Excluding Westbrooke,  sales contracts were 1208 homes in the current nine-month
period, a 59.6% increase over 1997.




                                       14
<PAGE>



Cost of sales  increased  by 79.9%,  to $238  million in the nine  months  ended
September 30, 1998,  from $132.3 million in the  comparable  period of 1997. The
increase  was  attributable  to the increase in  revenues.  As a  percentage  of
revenues,  cost of sales for the  nine-month  period  increased to 83.5% in 1998
from 81.5% in 1997. The increase in cost of sales as a percentage of revenues is
due primarily to the  acquisition of Westbrooke.  Generally,  the margins on the
homes sold in South Florida will carry lower margins due to the impact of higher
land cost  relative to sales price.  Excluding  Westbrooke,  as a percentage  of
revenues, cost of sales increased slightly to 81.6% in 1998 from 81.5% in 1997.

SG&A  expense  increased  by 63.2%,  to $31.2  million in the nine months  ended
September 30, 1998,  from $19.1 million in the  comparable  period of 1997. As a
percentage of revenues,  SG&A expense decreased  slightly to 10.9% in 1998, from
11.8% in 1997.  Excluding  Westbrooke,  SG&A expense increased by 38.8% to $26.5
million. This increase was caused by the expansion into Nashville,  Tennessee as
well as the  growth in the  Company's  Texas  markets  as  reflected  in the 27%
increase  in  revenues  and  the  112.3%  increase  in  the  backlog,  excluding
Westbrooke, at the end of September 1998 versus September 1997.

Interest expense amounted to $1.6 million in the nine months ended September 30,
1998,  compared to $1.5 million in the  comparable  period of 1997.  The Company
follows a policy of capitalizing  interest only on inventory under  construction
or  development.  During the nine months ended  September 30, 1998 and 1997, the
Company  expensed a portion of incurred  interest and other  financing  costs of
finished homes.  Capitalized  interest and other financing costs are included in
cost of sales at the time of home closings.

The Company's  provision for income taxes  decreased as a percentage of earnings
before taxes to 37.5% for the nine months ended September 30, 1998,  compared to
39.1% for the nine months  ended  September  30,  1997.  Under a tax  allocation
agreement  with Pacific  USA,  the Company is required to calculate  its federal
corporate  income tax  liability  as if it filed a separate  federal  income tax
return for each period and to pay  Pacific  USA the sum which would  result from
such calculation if the Company were subject to federal corporate income tax and
filed a separate tax return.  The Company  recognized federal income tax expense
under the tax allocation agreement amounting to $4.7 million for the nine months
ended  September  30, 1998  compared to $3.4  million for the nine months  ended
September 30, 1997.

Net income increased by 55% to $8.3 million for the nine months ending September
30, 1998 from $5.3  million  for the  corresponding  period in 1997.  Westbrooke
comprised 25.6% of the net income for the nine months ending September 30, 1998.

Financial Condition, Liquidity and Capital Resources

At September 30, 1998,  the Company had available  cash and cash  equivalents of
$3.1  million.   Inventories  (including  finished  homes  and  construction  in
progress,  developed  residential  lots and other land) at  September  30, 1998,
increased by $84.5 million from December 31, 1997, due to a general  increase in
business activity; the acquisition of Westbrooke and the expansion of operations
in the  newer  market  areas.  Because a portion  of the net  proceeds  from the
initial public offering was used to repay a portion of the outstanding  balances
under the Company's  construction  credit  facilities,  the  Company's  ratio of
construction  loans  payable  to  total  capital  assets  decreased  to 55.8% at
September 30, 1998,  from 62.5% at December 31, 1997. The equity to total assets
ratio decreased during the nine months, to 35.1% at September 30, 1998, from 40%
at December 31, 1997 due to the acquisition of Westbrooke (see Note 2).

The Company's  financing needs depend upon the results of its operations,  sales
volume, inventory levels, inventory turnover, and acquisitions.  The Company has
financed its operations through borrowings from financial institutions,  through
funds from earnings, and, in 1998, from the sale of common stock.

At September 30, 1998,  the Company had unused lines of credit for  construction
loans totaling  approximately $163.6 million of which $19.9 million is available
to draw down.




                                       15
<PAGE>



The  Company's  rapid  growth  requires  significant  amounts  of  cash.  It  is
anticipated  that  future  home   construction,   lot  and  land  purchases  and
acquisitions  will be  funded  through  internally  generated  funds and new and
existing borrowing relationships. The Company continuously evaluates its capital
structure  and, in the future,  may seek to further  increase  secured  debt and
obtain  additional  equity  to fund  ongoing  operations  as  well as to  pursue
additional growth opportunities.

Except for ordinary expenditures for the construction of homes and, to a limited
extent,  the  acquisition of land and lots for development and sale of homes, at
September  30,  1998,  the  Company  had no  material  commitments  for  capital
expenditures.

Seasonality and Quarterly Results

The homebuilding  industry is seasonal, as generally there are more sales in the
spring and summer  months,  resulting  in more home  closings  in the fall.  The
Company  operates in the  Southwestern  and  Southeastern  markets of the United
States, where weather conditions are more suitable to a year-round  construction
process than other areas. The Company also believes its geographic dispersion to
be somewhat  counter-cyclical,  with adverse economic conditions associated with
certain of its markets often being offset by more favorable economic  conditions
in other  areas.  The  seasonality  of school terms has an impact on the Company
operations,  but it is somewhat mitigated by the fact that many of the Company's
buyers at the higher end of the Company's price range, including Fedrick, Harris
custom homes,  no longer have children in school.  As a result of these factors,
among others,  the Company  generally  experiences  more sales in the spring and
summer  months,  and more  closings  in the  summer and fall  months.  Likewise,
Westbrooke has  experienced  seasonality in its revenues,  generally  completing
more  sales in the spring and  summer  months  and more  closings  in the fourth
quarter.

The Company historically has experienced,  and in the future expects to continue
to experience, variability in revenues on a quarterly basis. Factors expected to
contribute to the  variability  include,  among  others:  (i) the timing of home
closings;  (ii) the Company's ability to continue to acquire land and options on
acceptable  terms;  (iii) the timing of receipt of regulatory  approvals for the
construction of homes;  (iv) the condition of the real estate market and general
economic conditions;  (v) the cyclical nature of the homebuilding industry; (vi)
prevailing  interest rates and the  availability  of mortgage  financing;  (vii)
pricing policies of the Company's competitors;  (viii) the timing of the opening
of new residential projects;  (ix) weather; and (x) the cost and availability of
materials  and labor.  The Company's  historical  financial  performance  is not
necessarily a meaningful indicator of future results and the Company expects its
financial results to vary from project to project from quarter to quarter.

Management Information Systems

The Company  utilizes a number of computer  information  systems in  conjunction
with its  homebuilding and residential lot development  operations.  The Company
has converted the majority of its computer  information  systems to be Year 2000
compliant and expects to be totally  complete by the middle of 1999. The Company
is in the process of surveying its  significant  vendors and suppliers to assess
their  state of  readiness  for the Year  2000.  The  Company  cannot  currently
determine  to what  extent the Year 2000 issue will  affect  these  parties  and
consequently,  the Company. The financial impact of becoming Year 2000 compliant
has not been and is not  expected  to be  material  to the  Company's  financial
position or results of operations.


Item 3.  Changes in Information about Market Risk

         No disclosure required.




                                       16
<PAGE>


Part II.  Other Information

Item 1.  Legal Proceedings

         No disclosure required.

Item 2.  Changes in Securities

         No disclosure required.

Item 3.  Defaults Upon Senior Securities

         No disclosure required.

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

         No disclosure required.

Item 5.  Other Information

         No disclosure required.

Item 6.  Exhibits and Reports on Form 8-K

              1.  Exhibit 27 - Financial Data Schedule.



                                   SIGNATURE

         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.

                               NEWMARK HOMES CORP.

November 3, 1998                     By:   /s/   Terry C. White
Date                                     _______________________________________
                                         Terry C. White, Senior Vice President,
                                         Chief Financial Officer, 
                                         Treasurer and Secretary