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 June 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
Texas
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

<PAGE>
                                       2






                               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
     Condensed Notes to 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.     15

PART II.       OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS - None.                            16

ITEM 2.       CHANGE IN SECURITIES                                 16

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES - None.              16

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF                   16
              SECURITY HOLDERS - None.

ITEM 5.       OTHER INFORMATION - None.                            16

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K                     16

                Exhibits
                Exhibit 27 - Financial Data Schedule

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

              SIGNATURES                                           17

<PAGE>
                                       3



Part I.  Financial Information

Item 1.  Financial Statements

<TABLE>
<CAPTION>

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


                                ASSETS                                   June 30, 1998       December 31,
                                                                                                 1997
                                                                         --------------    -----------------
                                                                         (unaudited)                       
<S>                                                                      <C>                   <C> 
Cash ................................................................    $       3,590         $        746
Receivables..........................................................            7,906                1,729
Inventory............................................................          174,776              103,010
Investment in unconsolidated subsidiaries ...........................              256                  327
Other assets, net ...................................................            7,276                5,854
Goodwill, net of accumulated amortization of $4,473 and $3,773 in
     1998 and 1997, respectively ....................................           37,444               27,547
                                                                         ==============    =================
                  Total assets                                           $     231,248          $   139,213
                                                                         ==============    =================


                 LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans payable ..........................................    $     100,503          $    66,100
Acquisition notes payable............................................           16,026                -----
Other payables to affiliates ........................................              451                1,775
Accounts payable and accrued liabilities.............................           20,076               10,963
Other liabilities ...................................................           12,420                4,684
                                                                         --------------    -----------------
                  Total liabilities                                            149,476               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 June 30, 1998, issued and outstanding.............................              115                   92
Additional paid-in capital...........................................           73,768               52,165
Retained earnings....................................................            7,889                3,434
                                                                         --------------    -----------------
                  Total stockholders' equity                                    81,772               55,691
                                                                         ==============    =================
                  Total liabilities and stockholders' equity             $     231,248            $ 139,213
                                                                        ==============    =================

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

<PAGE>
                                       4



<TABLE>
<CAPTION>

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


                                                                        Three Months
                                                                        Ended June 30,
                                                                       ----------------  
                                                                    1998              1997
                                                                    ----              ----
<S>                                                             <C>                <C>  
Revenues..................................................      $  103,057         $  54,556
Cost of sales  ...........................................          86,381            44,523
                                                                   -------            ------
Gross profit..............................................          16,676            10,033

Equity in earnings from unconsolidated subsidiaries  .....             232                75
Selling, general and administrative expenses..............         (11,007)           (6,488) 
Depreciation and amortization.............................            (785)             (414)
                                                                      ----             -----
     Operating income ....................................           5,116             3,206
                                                                 
Other income (expense):
     Interest expense ....................................            (314)             (402)
     Other income, net ...................................             287               167 
                                                                       ---               ---
          Income before income taxes .....................           5,089             2,971
                                                     
Income taxes .............................................           1,911             1,162
                                                                     -----             -----
          Net income .....................................         $ 3,178           $ 1,809
                                                                     =====            =======
            
Earnings per common share:
     Basic                                                           $ .28             $ .20
                                                                     =====             =====
     Diluted                                                         $ .27             $ .20
                                                                     =====             =====
Weighted average number of shares of common stock
equivalents outstanding:
     Basic                                                      11,493,407         9,200,000
                                                                ==========         =========
     Diluted                                                    11,607,074         9,200,000
                                                                ==========         =========
<FN>
See accompanying notes to the condensed consolidated financial statements.
</FN>
</TABLE>

<PAGE>
                                       5


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


                                                                                 Six Months
                                                                               Ended June 30,
                                                                             -----------------
                                                                             1998           1997
                                                                             ----           ----
<S>                                                                       <C>            <C>    
Revenues.............................................................     $ 172,252      $ 100,797
Cost of sales  ......................................................       144,121         82,078
                                                                            -------         ------
Gross profit.........................................................        28,131         18,719

Equity in earnings from unconsolidated subsidiaries  ................           340            108
Selling, general and administrative expenses.........................       (19,144)       (12,133)
Depreciation and amortization........................................        (1,510)          (813)
                                                                            -------          -----
     Operating income ...............................................         7,817          5,881
Other income (expense):
     Interest expense ...............................................        (1,139)          (823)
     Other income, net ..............................................           453            336
                                                                                ---            ---

          Income before income taxes ................................         7,131          5,394
Income taxes ........................................................         2,676          2,109
                                                                              -----          -----
          Net income.................................................     $   4,455      $   3,285
                                                                          =========      =========

Earnings per common share:

     Basic                                                                    $ .42          $ .36
                                                                              =====          =====
     Diluted                                                                  $ .42          $ .36
                                                                              =====          =====
Weighted average number of shares of common stock 
equivalents outstanding:
     Basic                                                               10,562,983      9,200,000
                                                                         ==========      =========
     Diluted                                                             10,620,131      9,200,000
                                                                         ==========      =========
<FN>
See accompanying notes to the condensed consolidated financial statements.
</FN>
</TABLE>

<PAGE>
                                       6




<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   ............................                                      (1,355)       (1,355)
Net income...................................                                       3,285         3,285
                                                   ===========    ===========     =========     ===========
Balance, June 30, 1997.......................             $92        $42,539       $3,352       $45,983
                                                   ===========    ===========     =========     ===========




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...................................                                       4,455         4,455
                                                   ===========    ===========     =========     ===========
Balance, June 30, 1998.......................          $ 115         $73,768       $7,889       $81,772
                                                   ===========    ===========     =========     ===========


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


<PAGE>
                                       7


<TABLE>
<CAPTION>

                      NEWMARK HOMES CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)
                                                                                    Six Months
                                                                                  Ended June 30,

                                                                             1998                 1997
                                                                         --------------       -------------
<S>                                                                             <C>                 <C> 
Cash flows from operating activities:
   Net income.......................................................            $4,455              $3,285
   Adjustments to reconcile net income to net cash used in operating
     activities:
     Depreciation and amortization..................................             1,510                 813

     Net (gain) loss on sale of property, premises and equipment....                11                  10
     Equity in earnings from unconsolidated subsidiaries............              (340)               (108)
     Changes in operating assets and liabilities, net  of effects
     from purchase of Westbrooke Communities Inc.

         Inventory and land held for development, net...............          ( 29,877)             (6,279)
         Receivables................................................            (4,637)               (873)
         Other assets ..............................................             1,447                (829)
         Payable to affiliates......................................            (1,324)                389

         Accounts payable and accrued liabilities...................                71                 889
         Other liabilities..........................................             7,736                 677
                                                                         --------------       -------------
         Net cash used in operating activities  ....................          (20,948)              (2,026)
                                                                         --------------       -------------

Cash flows from investing activities:
    Proceeds from maturing certificate of deposit                                -----               1,000
   Purchases of property, premises and equipment ...................              (624)             (1,365)
   Increase in Goodwill ............................................              (438)                (40)
   Cash acquired in purchase of Westbooke Communities, Inc..........             3,618                ----
    Investment in unconsolidated subsidiaries                                    -----                (943)
   Distributions from unconsolidated subsidiaries ..................               411                 149
                                                                         --------------       -------------
         Net cash provided by (used in) investing activities .......             2,967              (1,199)
                                                                         --------------       -------------

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 ..................................................             -----              (1,355)
   Proceeds from advances on construction loans payable ............           118,086              75,664
   Principal payments on construction loans payable ................          (105,991)            (73,846)
   Principal payments on acquisition notes payable..................           (12,896)               -----
   Proceeds from advances on notes payable to affiliate.............             -----               2,318
   Principal payments on notes payable to affiliate ................             -----                (178)
                                                                         --------------       -------------
         Net cash provided by financing activities..................            20,825               2,727
                                                                         --------------       -------------

Increase (decrease) in cash ........................................             2,844                (498)
Cash, beginning of period ..........................................               746                 642
                                                                         ==============       =============
Cash, end of period ................................................            $3,590                $144
                                                                         ==============       =============

Supplemental disclosures of cash flow information: Cash paid for:
     Interest ......................................................            $4,492              $3,001
                                                                         ==============       =============
     Income taxes ..................................................            $1,964              $1,961
                                                                         ==============       =============
<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>

<PAGE>
                                       8


            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  and
                                                  Tennessee - 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
(PUDC)......................................      Residential  lot  development  in Texas and  Tennessee  -
                                                  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.

<PAGE>
                                       9


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 June 30, 1998 and 1997 and for the six months ended June 30,
1998 and 1997.
<TABLE>
<CAPTION>

                                  Three Months Ended June 30, 1998                 Three Months Ended June 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   $3,178,000        11,493,407         $.28         $1,809,000        9,200,000         $.20
                                                            ============                                     ============

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

Diluted EPS
      Income available to
      common shareholders
      + assumed conversions   $3,178,000        11,607,074         $.27         $1,809,000        9,200,000         $.20
                                                            ============                                     ============
</TABLE>


<TABLE>
<CAPTION>

                                  Six Months Ended June 30, 1998                   Six Months Ended June 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    $4,454,000        10,562,983         $.42         $3,285,000         9,200,000        $.36
                                                            ============                                      ===========

Effect of Dilutive
Securities
      1998 Tandem Stock
  Option Plan                      -----            57,148                           -----             -----
                           -------------- -----------------                 ---------------   ---------------

Diluted EPS
      Income available to
      common shareholders
      +assumed conversions    $4,454,000        10,620,131         $.42         $3,285,000         9,200,000        $.36
                                                            ============                                      ===========

</TABLE>
<PAGE>
                                       10


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
six months ended June 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.


                                    Three Months Ended      Six Months Ended
                                       June 30, 1997          June 30, 1997
                                       -------------          -------------
Revenues..........................         $77,720              $138,511
Cost of sales  ...................          64,763               114,991
                                            ------               -------

Gross profit......................          12,957                23,520
                                            ------                ------
          Net income                       $ 2,301               $ 3,787
                                           =======               =======
          
          Earnings per common share:
          Basic                              $.25                  $.41
                                             ====                  ====
          Weighted average number of
          shares of common
          stock equivalents outstanding:
          Basic                           9,200,000             9,200,000
                                          =========             =========



NOTE 3.       INVENTORY

The  inventory  as of June 30,  1998  and  December  31,  1997  consists  of the
following:
<TABLE>
<CAPTION>
                                                                                         Carrying value
                                                      Number of homes                    (in thousands)
                                               ------------------------------     ------------------------------
                                                 June 30,         December         June 30,       December 31,
                                                   1998           31, 1997           1998             1997
                                               -------------    -------------     ------------    --------------
<S>                                                     <C>               <C>         <C>               <C>    
Completed  ..................................           122               90          $24,899           $18,564
Under construction  .........................           943              444           97,933            48,352
Models  .....................................            90               40           17,722             8,490
Residential lots.............................         -----            -----           33,753            27,141
Land held for development....................         -----            -----              469               463
                                               =============    =============     ============    ==============
               Total                                  1,155              574         $174,776          $103,010
                                               =============    =============     ============    ==============
</TABLE>
<PAGE>
                                       11


NOTE 4.       CAPITALIZED INTEREST

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

                                                   Three Months Ended            Six Months Ended
                                                        June 30,                      June 30,
                                               --------------------------- -- ------------------------
                                                  1998               1997          1998          1997
                                               ------------    -----------    ----------    ----------
<S>                                                 <C>            <C>           <C>           <C>
Interest capitalized, beginning of period ....      $5,383         $1,747        $2,572        $1,494
Capitalized interest acquired in purchase of
      Westbrooke Communities, Inc.............       -----          -----         2,597         -----
Interest incurred ............................       2,578          1,569         5,169         3,015
Less interest included in:
      Cost of sales ..........................       2,105            847         3,657         1,619
      Other (income) expense .................         314            402         1,139           823
                                               ------------    -----------     --------        -------

Interest capitalized, end of period ..........      $5,542         $2,067        $5,542        $2,067
                                               ============    ===========    ==========    ==========
</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.




<PAGE>
                                       12


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 June 30,           Ended June 30,
                               ---------------------    ----------------------
                                    1998       1997           1998       1997
                                    ----       ----           ----       ----
<S>                                  <C>        <C>            <C>         <C>
Houston                              170        104            128         95
Austin                               123         75            101         87
Dallas                                58         38             40         38
Nashville                             14          0              6          0
South Florida                        233         20            208         29
                                     ---         --            ---         --

Total                                598        237            483        249
                                     ===        ===            ===        ===
</TABLE>

<TABLE>
<CAPTION>

                               New sales contracts,                                     Homes in
                               net of cancellations         Home closings             sales backlog
                               ---------------------    ----------------------    ----------------------
                                    Six Months               Six Months                   As of
                                  Ended June 30,           Ended June 30,               June 30,
                               ---------------------    ----------------------    ----------------------
                                    1998       1997           1998       1997           1998       1997
                                    ----       ----           ----       ----           ----       ----
<S>                                  <C>        <C>            <C>        <C>            <C>        <C>
Houston                              332        211            201        166            228        115
Austin                               226        178            187        160            164         90
Dallas                                96         74             74         64             64         38
Nashville                             20          0              6          0             14          0
South Florida                        438         51            346         74            459         74
                                     ---         --            ---         --            ---         --

Total                              1,152        514            814        464            929        317
                                   =====        ===            ===        ===            ===        ===
</TABLE>



<TABLE>
<CAPTION>

                                                    As a Percentage of Revenue           As a Percentage of Revenue
                                                               Three Months                         Six Months
                                                              Ended June 30,                      Ended June 30,
                                                    ------------------------------------ ----------------------------------
                                                          1998              1997              1998              1997
                                                          ----              ----              ----              ----
<S>                                                      <C>               <C>               <C>               <C>    
Cost of sales                                            83.8%             81.6%             83.7%             81.4%
Gross profit                                             16.2%             18.4%             16.3%             18.6%
Selling, general and administrative expenses             10.7%             11.9%             11.1%             12.0%
Income before income taxes                                4.9%              5.4%              4.1%              5.3%
Income taxes (1)                                         37.5%             39.1%             37.5%             39.1%
Net income                                                3.1%              3.3%              2.6%              3.3%
<FN>
(1) As a percent of income before income taxes.
</FN>
</TABLE>
<PAGE>
                                       13


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

Revenues for the three months ended June 30, 1998, increased by 88.9%, to $103.1
million,  from $54.6 million for the  comparable  period of 1997.  The number of
homes  closed by the Company  increased  by 94% to 483 homes in the three months
ended June 30, 1998 from 249 homes in the same period of 1997.  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 June 30, 1998,  Westbrooke closed 176
homes, with revenues totaling $30.0 million.  Westbrooke  comprised 36.4% of the
homes  closed in the  period,  and 30.0% of the  revenues  generated.  Excluding
Westbrooke,  revenues  increased by 32.2%,  to $72.1 million in the three months
ended June 30, 1998.

The average  selling  price of homes  closed in the three  months ended June 30,
1998 was  $212,362,  a  decrease  of 1.8%  from  $216,209  selling  price in the
comparable  period of 1997.  Westbrooke's  average  selling  price was $175,882.
Excluding  Westbrooke,  the average  selling price for homes closed in the three
months ending June 30, 1998 was $233,275, an increase of 7.9%.

New net sales contracts  increased 152%, to 598 homes for the three months ended
June 30, 1998,  from 237 homes for the three  months  ended June 30,  1997.  The
dollar amount of new net sales contracts  increased  159.1%,  to $129.9 million.
Westbrooke had 172 home sales  contracts  during the current  period.  Excluding
Westbrooke, sales contracts were 448 homes in the current three-month period, an
89% increase over 1997.

The Company was operating in 58  subdivisions  at June 30, 1998,  compared to 45
subdivisions at June 30, 1997. At June 30, 1998, the Company's  backlog of sales
contracts was 929 homes, a 193.1% increase over  comparable  figures at June 30,
1997. At June 30, 1998,  Westbrooke  had 337 homes in sales  backlog.  Excluding
Westbrooke, the sales backlog at June 30, 1998, was 592 homes, an 86.8% increase
over 1997.

Cost of sales  increased  by 94.0%,  to $86.4  million in the three months ended
June 30, 1998, from $44.5 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 83.8% in 1998 from 81.6 % 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 82.2% in 1998 from 81.6% in 1997.

Selling,  general and administrative (SG&A) expense increased by 69.7%, to $11.0
million  in the three  months  ended  June 30,  1998,  from $6.5  million in the
comparable  period of 1997. As a percentage of revenues,  SG&A expense decreased
slightly  to 10.7% in 1998,  from  11.9%  in 1997.  Excluding  Westbrooke,  SG&A
expense  increased  by 41.8% to $9.2  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 32.2%  increase in revenues  second quarter 1998 and
the 86.8% increase in the backlog at the end of June 1998 versus June 1997. Both
numbers exclude Westbrooke's results.

Interest  expense  amounted to $314,000 in the three months ended June 30, 1998,
compared to $402,000 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 June 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
June 30, 1998 compared to the quarter ending June 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 June 30,  1998,  compared to
39.1% for the three months ended June 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 $1,911,000 for the three months
ended June 30, 1998 compared to  $1,162,000  for the three months ended June 30,
1997.

Net income  increased by 75.7% to $3.2 million for the three months  ending June
30, 1998 from $1.8  million  for the  corresponding  period in 1997.  Westbrooke
comprised 40.3% of the net income for the three months ending June 30, 1998.
<PAGE>
                                       14


Six months Ended June 30, 1998 Compared to Six months Ended June 30, 1997.

Revenues for the six months ended June 30, 1998,  increased by 70.9%,  to $172.3
million,  from $100.8 million for the  comparable  period of 1997. The number of
homes  closed by the Company  increased  by 75.4% to 814 homes in the six months
ended June 30, 1998 from 464 homes in the same period of 1997.  The increases in
both revenues and homes closed were due in part to the acquisition of Westbrooke
in January  1998. In the six months ended June 30, 1998,  Westbrooke  closed 297
homes, with revenues totaling $51.2 million.  Westbrooke  comprised 36.5% of the
homes  closed in the  period,  and 29.7% of the  revenues  generated.  Excluding
Westbrooke,  revenues  increased by 20.1%,  to $121.0  million in the six months
ended June 30, 1998.

The average  selling price of homes closed in the six months ended June 30, 1998
was $209,891,  a decrease of 2.0% from $214,271  selling price in the comparable
period of 1997.  Westbrooke's  average  selling  price was  $172,509.  Excluding
Westbrooke,  the average selling price for homes closed in the six months ending
June 30, 1998 was $231,366, an increase of 8.0%.

New net sales contracts increased 124.1%, to 1152 homes for the six months ended
June 30, 1998, from 514 homes for the six months ended June 30, 1997. The dollar
amount  of  new  net  sales  contracts  increased  129.3%,  to  $247.6  million.
Westbrooke had 322 home sales  contracts  during the current  period.  Excluding
Westbrooke,  sales contracts were 830 homes in the current  six-month  period, a
61.5% increase over 1997.

Cost of sales increased by 75.6%, to $144.1 million in the six months ended June
30, 1998, from $82.1 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 83.7% in 1998  from  81.4 % 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 82.0% in 1998 from 81.4% in 1997.

Selling,  general and administrative (SG&A) expense increased by 44.2%, to $19.1
million  in the six  months  ended  June 30,  1998,  from  $12.1  million in the
comparable  period of 1997. As a percentage of revenues,  SG&A expense decreased
slightly  to 11.1% in 1998,  from  12.0%  in 1997.  Excluding  Westbrooke  SG&A,
expense  increased by 30.5% to $15.8  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 20% increase in revenues and the 61% increase in the
backlog, excluding Westbrooke, at the end of June 1998 versus June 1997.

Interest  expense  amounted to $1,139,000 in the six months ended June 30, 1998,
compared to $823,000 in the  comparable  period of 1997.  The Company  follows a
policy  of  capitalizing  interest  only  on  inventory  under  construction  or
development.  During the six months  ended June 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 six months ended June 30, 1998,  compared to 39.1%
for the six months ended June 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 $2,676,000 for the six months ended June 30,
1998 compared to $2,109,000 for the six months ended June 30, 1997.

Net income increased by 35.6% to $4.5 million for the six months ending June 30,
1998  from  $3.3  million  for the  corresponding  period  in  1997.  Westbrooke
comprised $33.9% of the net income for the six months ending June 30, 1998.

<PAGE>
                                       15


Financial Condition, Liquidity and Capital Resources

At June 30, 1998,  the Company had available  cash and cash  equivalents of $3.6
million.  Inventories  (including  finished homes and  construction in progress,
developed  residential lots and other land) at June 30, 1998, increased by $71.8
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 56.3% at June 30, 1998, from
62.5% at December 31, 1997.  The equity to total assets ratio  decreased  during
the six months,  to 35.4% at June 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 June 30, 1998, the Company had unused lines of credit for construction  loans
totaling  approximately  $148.8  million of which $22.3  million is available to
draw down.
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
June 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 has  conducted a review of its computer  systems to identify how its
computer  systems  could be affected by the "Year 2000"  issue.  Based upon this
review,  the Company  believes  that it has  adequately  addressed the Year 2000
issue, and that any further  modifications to the Company's systems with respect
to  the  Year  2000  issue  will  not  result  in  significant   future  capital
expenditures.  There  can be no  assurance  that the year  2000  issue  will not
adversely effect the company or its business.

Item 3.  Changes in Information About Market Risk

         No disclosure required.
<PAGE>
                                       16


Part II.  Other Information

Item 1.  Legal Proceedings

         No disclosure required.

Item 2.  Changes in Securities

Use Of Proceeds of Initial Public Offering:

The Company's Registration Statement on Form S-1 (Commission File No. 333-42213)
was  declared  effective  March 12, 1998.  Dain  Rauscher  Incorporated  was the
managing underwriter.

The Company registered 2,000,000 shares of common stock at a price of $10.50 per
share and granted  the  underwriters  an option to purchase up to an  additional
300,000  shares of common  stock solely to cover  over-allotments  at a price of
$10.50 per share.

On March 13,  1998  2,000,000  shares of common  stock were issued at a price of
$10.50 per share and on April 3, 1998 300,000 shares of common stock were issued
under the Underwriters' over-allotment option at a price of $10.50 per share.

The expenses  incurred in connection  with the issuance and  distribution of the
common stock for underwriting discounts and commissions, finders' fees, expenses
paid to and for underwriters and legal fees were $ 2,825,000.

The net  proceeds  from the sale of the  shares of Common  Stock  offered by the
Company  was  $21,325,500  after the  Underwriters'  over-allotment  option  was
exercised and after  deducting the  underwriting  discounts and  commissions and
other offering expenses.

Of the net  proceeds,  the  Company  used  $10.0  million  to pay the bank  loan
incurred by Westbrooke in connection  with its  acquisition by the Company.  The
remaining  balance of net proceeds was used to pay a portion of the  outstanding
balances under the Company's construction credit facilities.

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.


<PAGE>
                                       17


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                     NEWMARK HOMES CORP.

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