CROSSMANN COMMUNITIES INC, 10-K, 1997-03-14

CROSSMANN COMMUNITIES INC
10-K, 1997-03-14
OPERATIVE BUILDERS

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DOCUMENT - 8 1/2 X 11"
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________

FORM 10-K
____________________

[ x ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the fiscal year ended December 31, 1996

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.

Commission file number 0-22562
<TABLE>

CROSSMANN COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)

<S> <C>

INDIANA 35-1880120
- ---------------------------------------- ---------------------------
(State of Incorporation) (I.R.S. Identification No.)
9202 NORTH MERIDIAN STREET
INDIANAPOLIS, IN 46260
- ---------------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
(317) 843-9514
- ----------------------------------------
(Telephone Number)
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None

SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

COMMON SHARES, WITHOUT PAR VALUE
(Title of class)

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

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

The aggregate market value of the voting stock held by non-affiliates of
the registrant on March 12, 1997 was approximately $120,983,919. As of March
12, 1997, there were 6,125,768 Common Shares of the registrant issued and
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the documents listed below have been incorporated by
reference into the indicated part of this Form 10-K.
DOCUMENT INCORPORATED PART OF FORM 10-K
Proxy Statement for 1997 Annual Meeting of Shareholders Part III

PART I

ITEM 1. BUSINESS

GENERAL

Crossmann Communities, Inc. ("Crossmann" or "the Company") has provided
homes to families in central Indiana since 1973. Today the Company
operates in eight markets: Indianapolis, Lafayette, Ft. Wayne and Columbus,
Indiana; Columbus, Cincinnati, and Dayton, Ohio; and Louisville, Kentucky.
Crossmann's homes are targeted to entry-level and first move-up home buyers.
In 1996, the average size of one of Crossmann's new homes was 1,400 square
feet, and the average selling price was approximately $110,970.

Crossmann has consistently achieved sales and net income growth over
recent years, having achieved a 5-year average compound annual growth in
revenue of over 40%. The Company's success has been and will continue to be
dependent upon the following key operating strategies:

1. Focused Market Approach. The Company focuses on affordably priced
entry-level and first move-up single family homes, in markets the Company
believes have significant and stable long-term demand. Management believes
that entry-level housing generally allows high volume homebuilders, such as
the Company, to build a standardized product. This permits efficiencies in
construction and materials purchasing that can result in high margins. The
company will continue to focus on providing product lines which address the
needs of this market segment.

2. Emphasis on Customer Service. The Company is committed to providing
a high level of customer service as an integral component of its competitive
strategy. The Company serves its customer through the attention it devotes
to the financial concerns of its customers and by producing a high quality
product.

3. Market Concentration. The Company currently conducts its business in
seven major Midwestern cities. The Company believes that these cities enjoy
relatively low unemployment, diversified industry, and satisfactory
infrastructure. The Company believes that these characteristics, among
others, make these cities attractive to employers, which, in turn, create
demand for housing of the type offered by the Company. The Company intends to
explore opportunities to expand its homebuilding operations to metropolitan
areas that it believes offer stable economic characteristics similar to those
of its existing markets. The Company believes that its most effective
expansion opportunities will be in similar markets where it can effectively
utilize the strengths of its operating strategy.

At some time in the future the Company may consider expansion beyond the
Midwest. It is probable that the Company will consider the acquisition of
other homebuilders in connection with its expansion into new regions as
management believes that this process shortens the time required to become
profitable in a new market.

4. Land Development. Management believes that the development of land
achieves several strategic objectives by (i) helping the Company to improve
its profit margins by reducing the cost of the land on which its homes are
built; (ii) ensuring the Company of an adequate supply and location of lots to
meet market demand; (iii) allowing the Company to control the developments in
which it builds its homes; and (iv) allowing the Company to construct homes
efficiently and more cost-effectively by permitting the construction of
several similar homes within the same neighborhood at the same time.

5. Stringent Cost Controls. The large number of homes built by the
Company allows it to purchase both products and services at favorable prices.
Additionally, the Company has relatively few home designs, enabling it to
significantly reduce delays and expenses associated with educating
subcontractors as to new design requirements. The Company controls its
construction costs through favorable pricing negotiated with subcontractors
due to the efficient design of its homes. The Company believes that its
success in dealing with subcontractors can be attributed to the large amount
of work each subcontractor performs for the Company and from the long-term
relationships the Company has with most of its subcontractors.

MARKETS

Indianapolis, Indiana. Indianapolis is the capital of Indiana; as a
result, federal, state and local government offer a source of significant and
stable employment in the city. According to the 1990 Census, the Indianapolis
metropolitan statistical area ("MSA") had a population of 1,250,000, an
increase of 7.1% over 1980. Indianapolis is a major center for manufacturing,
distribution, insurance, and financial and health services. Major private
sector employers include the Allison Engine Company, the Allison Transmission
division of General Motors, DowElanco, Boehringer Mannheim Corporation,
Thomson Consumer Electronics and Eli Lilly & Company. As of December 31,
1996, metropolitan Indianapolis had an unemployment rate of 2.6% as compared
to the national average of 5.4%. The city is located at the intersection of
four major interstates, and one-quarter of the nation's population is within a
day's drive. A $1 billion aircraft maintenance hub for United Airlines has
recently begun operations, and a $62 million express mail sorting facility for
the U.S. Postal Service has recently been completed.

Crossmann delivered more single-family detached homes in the
Indianapolis metropolitan market than any other homebuilder in 1996. The
Company operates in each of the eight counties in metropolitan Indianapolis,
offering homes that range in price from $74,900 to $150,000. The Company
currently is offering homes in 45 communities. The Company traditionally has
focused its development efforts in areas that offer a commute to downtown
Indianapolis of 30 minutes or less, which represents a distance of no more
than 30 miles. The Company believes that further growth opportunities exist
in areas located further from downtown Indianapolis than the Company
traditionally has focused, although there can be no assurance that such
opportunities will benefit the Company.

Southern Indiana. In December 1995, the Company opened a new office in
Columbus, Indiana to serve communities south of Indianapolis that have
experienced job growth in recent years. From this office the Company manages
construction in 13 communities in Columbus, Bloomington, Franklin, Greensburg,
Seymour, and Shelbyville, Indiana.

Lafayette, Indiana. Lafayette is located approximately 66 miles
northwest of Indianapolis. The Lafayette metropolitan area had a population
of 130,598 according to the 1990 Census. West Lafayette is the home of
Purdue University, which is the city's largest employer. Other major
employers in the Lafayette metropolitan area include Subaru-Isuzu America,
Inc., Wabash National Corporation, Alcoa, Great Lakes Chemical and A.E.
Staley. As of December 31, 1996, metropolitan Lafayette had an unemployment
rate of 2.3% as compared to the national average of 5.4%.

Crossmann delivered more single-family detached homes in the Lafayette
metropolitan market than any other homebuilder in 1996. The Company does
business in one county which comprises metropolitan Lafayette, offering homes
that range in price from $79,900 to $135,000. The Company currently is
offering homes in 4 communities in the Lafayette metropolitan area.

Ft. Wayne, Indiana. Ft. Wayne is the second largest city in Indiana.
According to the 1990 Census, the population of the Ft. Wayne MSA was 455,831.
As of December 31, 1996, metropolitan Ft. Wayne had an unemployment rate of
2.8% compared to a national average of 5.4%. Major employers include Lincoln
National Corporation, General Motors Truck and Bus, General Electric, ITT
Aerospace, and Dana Corporation. Crossmann has lot purchase agreements in 8
communities within the Ft. Wayne MSA.

Columbus, Ohio. Columbus is the capital of the state of Ohio and, as a
result, federal, state and local government offer a source of significant and
stable employment in the city. The 1990 Census showed that the Columbus MSA
had a population of 1,377,000, which represented an increase of 10.7% over
1980. The unemployment rate for the Columbus MSA for 1996 was 3.0%, which was
below the national average of 5.4%. Columbus is the home of Ohio State
University, which has one of the largest single college campus populations in
the world and an annual budget that exceeds $1 billion. Major private
employers in Columbus include The Limited, Inc., Nationwide Insurance, Lucent
Technologies, Honda of America, and Banc One Corporation. The Company
currently offers new homes in 18 communities in the Columbus metropolitan
area.

Cincinnati, Ohio. The Cincinnati, Ohio metropolitan area had a
population of 1,744,124 in 1990 and is the second largest MSA in Ohio. It is
a major cultural and recreation center. Cincinnati had an unemployment rate
of 4.5% in 1996 compared to a national average of 5.4%. Major employers
include U.S. and local government agencies, Procter & Gamble Co., the
University of Cincinnati, the Kroger Co., and G.E. Aircraft Engines. The
Cincinnati International Airport is a major hub for Delta Airlines. Last
year, 1995, was the first full year of operations for the Cincinnati office.
Crossmann owns lots and has land purchase agreements in 9 communities within
the Cincinnati MSA.

Dayton, Ohio. In December 1995, the Company opened its first sales
office in Dayton, Ohio. In April of 1996, the Company increased its land
position with the acquisition of the assets of Tom Peebles Builders, Inc., an
established Dayton homebuilder. Today the Company operates in 8 communities
in Dayton.

The Dayton metropolitan area had a population of 951,270 in 1990 and an
unemployment rate of 4.2% at December 31, 1996 compared to a national average
of 5.4%. Major employers include Wright-Patterson Air Force Base, General
Motors, Airborne Express, Elder-Beerman Stores, and Navi-Star International
Trans. Corp. The Company has 57 lots under development, ready for new home
construction in the first quarter of 1996.

Louisville, Kentucky. In December 1995, the Company opened a new office
in Louisville. The Louisville metropolitan area had a population of 980,860
in 1990, and an unemployment rate as of December 31, 1996 of 4.0% compared to
a national average of 5.4%. Major employers include UPS, General Electric,
Ford Motor Co., Columbia Health Care, Inc. and Humana. Crossmann began its
marketing efforts in Louisville late in 1996 and currently offers homes in 6
Louisville communities.

PRODUCT LINES

The Company sells homes under the names "New American Homes," "Deluxe
Homes" and "Trimark Homes." Within these product categories, the Company
offers a variety of floor plans and exterior styles with two, three, and four
bedrooms, two or more bathrooms and a two-car attached garage. Contracts for
the sale of homes are at fixed retail prices. Standard features of each
product line include built-in appliances and custom wood cabinets in the
kitchen, wall-to-wall carpeting, a high-efficiency furnace, maintenance-free
vinyl siding, landscaped yard and poured concrete walks, porches and
driveways. Purchasers are given the opportunity to select, at additional
costs, such amenities as patios or decks, wood windows, skylights, upgraded
carpeting and flooring, a fireplace or a basement.

Each of the Company's product lines is targeted at entry-level and first
move-up buyers and, although there are similarities among the homes in the
different product lines, New American Homes tend to be smaller and include
fewer standard amenities than Deluxe Homes or Trimark Homes, and Trimark Homes
tend to offer greater living space and include more standard amenities than
New American Homes or Deluxe Homes. In 1996 the average price of the homes
sold in these categories was $90,400 for the New American Homes line, $108,300
for the Deluxe Homes line and $123,100 for the Trimark Homes line.

The Company intends to remain focused on delivering housing desired by
entry-level and first move-up buyers. It will explore modification of its
existing product lines or creation of new product lines when local marketing
efforts indicate changes will appeal to this segment.

CONSTRUCTION

The Company acts as the general contractor for the construction of its
residential communities. The Company's construction supervisors monitor the
construction of each home, participate in design and building decisions,
coordinate the activities of subcontractors and suppliers, maintain quality
and cost controls and monitor compliance with zoning and building codes.
The construction of detached single-family homes by the Company is
generally tied to home buyer sales contracts to minimize the costs and risks
of completed but unsold inventory. When a buyer has received pre-approval
from a mortgage company for his or her financing, the Company develops a
budget for the construction of the house, which takes into account the model
of the home, the options selected and the lot on which the house is to be
constructed. A contract is entered into with the buyer on the basis of this
budget.

Construction time for each home is tied to a construction schedule
established for each of the Company's home types. The Company's construction
schedules range in duration from 60 to 120 days. Variances from the schedule
are infrequent but may occur due to weather conditions or the availability of
labor, materials and supplies.

Once a contract has been signed, a "house work order" is generated and
sent out to the Company's field supervisor and to each subcontractor who will
work on the home. The house work order describes each task that must be
completed to build the house and the materials required to complete the task.
Subcontractors prepare vouchers on the basis of a price list provided by the
Company which specifies the current rate that the Company will pay for the
nature of the task completed and the materials used. Price lists are updated
periodically based on changes in the costs of raw materials and other factors.
Vouchers prepared by the subcontractor must be reviewed and approved by the
field supervisor before they are paid by the Company.

The use of subcontractors enables the Company to minimize its investment
in direct employee labor, capital, equipment and building supply inventory.
This practice also increases the Company's flexibility in responding to
changes in the demand for housing. The Company has had long business
relationships with many of its subcontractors. These relationships, coupled
with the volume of homes built by the Company, enable the Company to negotiate
favorable agreements with its subcontractors.

The Company's office staff is responsible for sales processing,
estimating, architectural design, centralized purchasing, contract management,
home site planning, obtaining governmental approvals, closing, accounting and
warranty service, among other responsibilities. The Company's management
information system is designed to monitor the progress of each home built by
the Company, from acceptance of a sales contract to delivery of the complete
home to the buyer. Corporate headquarters also monitors the vouchers
submitted by the Company's sub-contractors. Variances in the submitted
vouchers from the established price lists are reviewed and, where not
reasonable under the circumstances, are charged back to the vendor.

Despite seasonal changes in the weather, the Company has maintained a
construction schedule throughout the entire year. To permit winter
construction, the Company pours additional slab foundations during the fall.
The cost of these additional foundations is not significant. However,
additional construction charges are incurred due to such factors as temporary
heating costs, additives to concrete, extra utility charges and the placement
of temporary stone driveways, sidewalks and landscaping.

Except as necessary to maintain customer satisfaction with the aesthetics
of its product lines, the Company does not materially change its home designs
and floor plans from year to year. The Company believes that consistency in
the design of its homes helps reduce costs and minimize delays by avoiding
expenses associated with educating subcontractors on the requirements of a new
design. Where practical, the Company uses mass production techniques,
construction on contiguous lots, and prepackaged standardized components to
streamline the on-site construction phase.

The Company maintains small inventories of some construction materials in
addition to the construction materials for work in process of homes under
construction. The Company has not experienced any significant delays in
construction due to shortages of materials or labor.

LAND ACQUISITION AND DEVELOPMENT

The Company typically acquires unimproved land through contingent
purchase agreements. Closing of the land is contingent upon, among other
things, the Company's ability to obtain necessary zoning and other
governmental approvals for the proposed development, confirmation of the
availability of utilities and completion of an environmental review.
Once the land has been purchased, the Company undertakes development
activities that include site planning and engineering, as well as constructing
roads, sewer, water and drainage facilities and other amenities. The
activities are carefully managed, with phases geared to the Company's
projected sales. Generally, management of the Company attempts to maintain an
inventory of "finished" lots sufficient for approximately half the homes which
the Company anticipates it will construct during the next 18 months. In
addition, the Company maintains an inventory of raw land in anticipation of
its needs for a period of 18 to 36 months in the future. The following chart
summarizes the Company's available lot inventory as of December 31, 1996.

<TABLE>

Finished Lots Under Raw Land Under
Lots Development (Est. Lots) Total Option

Indianapolis . . . . . . 627 954 775 2,356 3,626
Lafayette. . . . . . . . 38 72 163 273 648
Ft. Wayne. . . . . . . . . 161 -0- -0- 161 118
Columbus. . . . . . . . 236 84 550 870 234
Cincinnati. . . . . . . . 82 274 543 899 159
Southern Indiana . . 190 162 128 480 338
Dayton . . . . . . . . . . . 156 284 706 1,146 143
Louisville . . . . . . . 46 -0- -0- 46 81
-------- ----------- ----------- ----- ------
1,536 1,830 2,865 6,231 5,347
======== =========== =========== ===== ======

</TABLE>

In addition to purchasing unimproved land outright, the Company from
time to time has used partnerships and joint ventures to acquire and develop
land. Joint ventures sell finished lots to builders, including, but not
limited to, the Company. The Company will continue to consider such
partnership and joint venture arrangements in the future when management
perceives a favorable opportunity. In 1996, the Company was a participant in
seven such joint ventures.

The development of land is extremely capital intensive, and as a result,
the Company's ability to develop land is limited. In 1996, the Company
developed approximately 56% of the lots on which its homes were built,
compared to approximately 50% in 1995. In 1997 the Company expects
approximately half of its houses will be built on lots it has developed.

MARKETING AND SALES

The Company sells its homes through a sales force of commissioned
independent contractors ("New Home Counselors") who work from sales offices
located at the Company's headquarters and in model homes located in each
residential community. New Home Counselors of the Company advise prospective
buyers throughout the home buying process by providing information on the
Company's product lines of homes, pricing, options and upgrades, financing
options, warranties and construction.

The Company's New Home Counselors advise buyers, many of whom are
first-time home buyers, on available financing options. The Company builds
most of its homes under the guidelines and specifications of the Federal
Housing Administration (FHA) and the Veterans Administration (VA), thereby
offering eligible buyers the benefit of FHA/VA mortgages. The Company
believes that such counseling and the availability of FHA/VA financing is
important to its overall success in that many entry-level and first move-up
buyers have limited financial resources.

New Home Counselors contract with the Company, and the Company attempts
to maintain long term relationships with them. New Home Counselors attend
weekly sales meetings at which they are kept apprised of changes in available
financing options and other information relevant to prospective buyers and
semi-annual seminars offered by the Company on a variety of marketing topics.

The Company does most of its advertising in the classified advertisement
section of local newspapers. The Company also attracts buyers as a result of
referrals, directional signs and direct mailings. From time to time the
Company may participate in television and radio advertising promotions.

The Company offers a Guaranteed Sale Program to certain buyers having
existing homes which they intend to sell before purchasing a home constructed
by the Company. Under the Guaranteed Sale Program the Company will assist
the buyer in selling his or her existing home and, if that home is unsold at
closing, the Company will purchase the buyer's home at a predetermined price.
Management of the Company believes that the Guaranteed Sale Program has been
an effective marketing tool for the Company as many prospective buyers are
hesitant to purchase a new home until they are certain that they will be able
to sell their existing residence. Sales to new home buyers who executed
contracts under the Guaranteed Sale Program contributed approximately $14.6
million to 1996 sales.

FINANCING

The Company assists its customers in financing their new home in several
ways. First, the Company's New Home Counselors are available to consult with
the customers on available financing options to determine how much house the
individual can afford. Second, the Company builds most of its homes under the
guidelines and specifications of the Federal Housing Administration and the
Veterans Administration, thereby providing eligible prospective buyers the
added benefit of the availability of FHA/VA mortgages. This is significant
because FHA and VA financing generally enable buyers to purchase homes with
lower down payments than the down payments required by conventional mortgage
lenders and allows applicants to direct a larger percentage of their incomes
toward housing expenses. The FHA/VA insured mortgages also provide more
liberal rules with respect to the amount of points and closing costs that the
seller may pay. In 1996, approximately 64% of the homes delivered by the
Company were financed with FHA/VA mortgages.

As is typical in the homebuilding industry, the Company's home sales
contracts generally provide that the Company will pay on behalf of the buyer
the mortgage loan closing costs, origination fees and discount points incurred
by the buyer, within limits established in the sales contract and not in
excess of the maximum amounts allowable by the government mortgage programs
utilized by the Company.

MORTGAGE BROKERAGE SUBSIDIARY

The Company has established a mortgage brokerage subsidiary, Crossmann
Mortgage Corp. Crossmann Mortgage Corp. was certified by FHA, a program of
the federal Department of Housing and Urban Development in July 1994. Once
certified, the subsidiary began processing FHA, VA, and conventional loans and
selling the servicing rights. The revenue of this subsidiary is comprised
of origination fees and servicing release fees, and its expenses primarily
include administrative personnel salaries and other general office expenses.
Crossmann Mortgage Corp. does not endorse, warehouse or fund loans and, as a
result, does not incur a credit risk or market risk associated with loans it
originates.

CUSTOMER SERVICE AND QUALITY CONTROL

It is the view of the Company's management that the Company is primarily
a service company rather than a manufacturing concern. This philosophy is
reflected in the way the Company treats its customers before and after the
sale.

Before the sale, the Company's New Home Counselors work with the customer
to select from available options in order to customize their new home to their
particular taste. Once an application has been approved and construction on a
new home commenced, the Company encourages the buyer to visit the site during
the construction process. Before a buyer takes occupancy of a new house a
pre-inspection tour is conducted with the buyer to ensure that the buyer is
satisfied with the condition of the home and to attempt to correct any
problems before the buyer takes possession. When the buyer visits the
Company's administrative office to make color selections and complete the
house work order, the Company provides the new homeowner with a detailed
checklist which describes the items covered by the Company's warranty.
Approximately 30 days after closing, representatives of the Company place a
courtesy call to the new homeowner to enable him or her to ask any questions
that have arisen since they took possession. Customers are encouraged to
request an additional walk-through of the home approximately 90 days after
closing. Finally, the Company also offers its customers a final inspection on
the first anniversary of the closing to check the home for items to be
submitted for warranty action and to discuss any items which the customer
believes warrant the Company's attention.

Each home sold by the Company is covered by a comprehensive warranty from
an independent HUD approved warranty company. The warranty extends coverage
for ten years for structural matters, four years for the roof of the home and
two years for other specified items. By maintaining this warranty program,
the Company is required to undergo one inspection, rather than three, to
qualify for FHA/VA financing, thereby reducing the cost and time delay
associated with such inspections.

COMPETITION AND MARKET FACTORS

The development and sale of residential properties is highly competitive.
The Company competes in the sale of homes with the resale market for existing
homes and with other homebuilders.

The Company competes for residential sales on the basis of a number of
interrelated factors, including location, reputation, amenities, design,
quality and price. Management believes that entry-level housing generally
allows high volume homebuilders, such as the Company, to build a more
standardized product, thus permitting efficiencies in construction and
materials which can result in higher margins. Some of the Company's
competitors have greater financial, marketing and sales resources than the
Company.

The Company also competes for residential sales with individual resales
of existing homes and condominiums and with available rental housing. The
resale market for existing homes has several attractions for home buyers
including the following: (i) buyers of existing homes can generally take
occupancy of their homes more quickly; (ii) sellers in the resale market
generally have a lower basis in their homes and therefore may have price
expectations different from those of sellers of new homes; and (iii) resale
homes are generally located in established neighborhoods. The Company
attempts to meet this competition from the home resale market by offering
benefits which this market cannot provide, notably the latest design features,
the flexibility to select interior and exterior finishes, new home warranties
and more desirable locations from which to choose a home site.

The Company believes that a competitive challenge facing it in all of its
present markets is locating and acquiring undeveloped land suitable for the
types of communities which it can profitably develop. Although the Company
has been successful in the past in locating and developing such tracts within
its present markets, there can be no assurance that this success will
continue. If the Company expands the geographic scope of its business to new
markets, there can be no assurance that the Company will be successful in
acquiring suitable land for development in such markets.

The housing industry is cyclical and affected by consumer confidence
levels and prevailing economic conditions in general and by job availability
and interest rate levels in particular. A variety of other factors affect the
housing industry and demand for new homes, including changes in costs
associated with home ownership such as increases in property taxes and energy
costs, changes in consumer preferences, demographic trends and availability of
and changes in mortgage financing programs.

TRADEMARKS

"Trimark" is a federally registered service mark for real estate
development services that is owned by the Company. The Company has not yet
registered its "Deluxe" trademark. "Crossmann Communities" is a federally
registered service mark for construction planning, laying out residential
communities and residential construction services that is owned by the
Company.

EMPLOYEES

At December 31, 1996, the Company had 289 full-time employees and 10
part-time employees. The Company is not a party to any collective bargaining
agreements. The Company considers its relationship with its employees to be
good.

GOVERNMENT REGULATIONS AND ENVIRONMENTAL MATTERS

The housing industry and the Company are subject to various local, state
and federal statutes, ordinances, rules and regulations concerning zoning,
resource protection, building design, construction and similar matters,
including local regulations which impose restrictive zoning and density
requirements in order to limit the number of residences that can eventually be
built within the boundaries of a particular location. Furthermore, in
developing a project the Company must obtain the approval of numerous
governmental authorities regulating such matters as permitted land uses and
levels of density and the installation of utility services such as
electricity, water and waste disposal.

The length of time necessary to obtain permits and approvals increases
the carrying cost of unimproved property acquired for the purpose of
development and construction. In addition, the continued effectiveness of
permits already granted is subject to factors such as changes in policies,
rules and regulations and their interpretation and application. Such
regulation affects construction activities and may result in delays, cause the
Company to incur substantial costs and prohibit or severely restrict
development in certain environmentally sensitive regions or areas. To date,
the governmental approval processes discussed above have not had a material
adverse effect on the Company's development activities. In addition, because
the Company purchases land contingent upon necessary zoning, restrictive
zoning issues also have not had a material adverse effect on the Company's
development activities. However, there is no assurance that these and other
restrictions will not adversely affect the Company in the future.

The Company generally will condition its obligation to purchase land on,
among other things, an environmental review of the land. However, there can
be no assurance that the Company will not incur material liabilities relating
to the removal of toxic wastes or other environmental matters affecting land
owned by the Company or land which the Company no longer owns. To date, the
Company has not incurred any liability relating to the removal of toxic wastes
or other environmental matters and to its knowledge has not acquired any land
with environmental problems.

ITEM 2. PROPERTIES

The Company leases approximately 20,000 square feet of office space for
its headquarters and Indianapolis building division at 9202 North Meridian
Street in Indianapolis, Indiana from Pinnacle Properties LLC, an entity owned
by the Company's Chairman of the Board and Chief Executive Officer, John B.
Scheumann, and its President and Chief Operating Officer, Richard H. Crosser.
The monthly rent on the lease is $15,609. The Company's subsidiary,
Crossmann Mortgage Corp., leases separate space within the same building,
approximately 4,000 square feet, at $4,354 per month. The Company's real
estate brokerage subsidiary, Merit Realty leases approximately 953 square feet
in the same building at $1,032 per month. The leases expire March 1, 1999.

The Company also leases approximately 5,000 square feet of warehouse
space at 9202 North Meridian Street from Pinnacle Properties LLC. The monthly
rent is $2,708. Management believes that the terms of these leases are no
less favorable to the Company than terms available from unrelated third party
lessors.

<TABLE>

The Company's other divisions occupy rented space in their respective communities as
follows:

Located in Square Feet Monthly Rent Expires Extensions

Southern Indiana . Columbus, IN 1,880 $ 1,880 December 1998 yes
Lafayette . . . . . . . Lafayette, IN 5,268 3,167 August 2000 yes
Ft. Wayne . . . . . . Ft. Wayne, IN 2,500 1,600 February 1997 yes
Columbus . . . . . . Westerville,OH 6,642 4,709 December 2000 yes
Cincinnati/Dayton Mason, OH 3,686 3,533 June 2001 yes
Louisville . . . . . . Louisville, KY 1,766 1,803 September 1997 yes

</TABLE>

ITEM 3. LEGAL PROCEEDINGS

The Company from time to time is involved in routine litigation
incidental to its business. The Company does not believe that any liabilities
resulting from litigation to which it is a party will materially affect the
Company's financial position and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

At its annual meeting held May 22, 1996, Crossmann's management submitted
to the shareholders a proposal to increase the number of shares available to
employees under its incentive option plan. Under the proposal the number of
shares authorized was increased from 325,000 to 625,000. A majority of
shareholders approved the proposal.

PART II

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

The Company's common shares trade on the Nasdaq Stock Market under the
symbol: "CROS." During the year ended December 31, 1996, the high closing
sales price per share as reported by the Nasdaq National Market System was
$21.75. The low closing sales price per share was $15.75.
<TABLE>

High and low share prices for the last two fiscal years were:

1995 1996
Quarter ended High Low High Low
- ------------- ------ ------ ------ ------
March 31 $ 9.50 $ 5.25 $21.00 $17.50
June 30 11.00 8.75 21.75 17.50
September 30 16.00 10.50 19.75 16.25
December 31 19.00 14.00 19.38 15.75
</TABLE>

The closing sale price of the Company's Common Shares as reported on the
Nasdaq National Market System on March 12, 1997 was $19.75. As of March 12,
1997, there were 51 holders of record of the Company's Common Shares. The
Company's transfer agent estimates that there are approximately 920 beneficial
owners of the Company's Common Shares.
The transfer agent for the Company's common shares is American Stock
Transfer & Trust. Its address is 40 Wall Street, New York, NY 10005.

The Company has not paid dividends since its initial public offering in
October 1993. It anticipates that future earnings will be retained to
finance the continuing development of its business and does not anticipate
paying cash dividends on its Common Shares in the foreseeable future. The
payment of future dividends will be at the discretion of the Company's Board
of Directors and subject to consent of its primary lenders. Payment of future
dividends will depend upon, among other things, future earnings, the success
of the Company's expansion activities, capital requirements, the general
financial condition of the Company and general business conditions. The
Company is party to credit agreements with noteholders and commercial banks
that restrict its ability to pay cash dividends with respect to the Common
Shares. (See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.")

ITEM 6. SELECTED FINANCIAL DATA

The following is selected audited consolidated financial data of the
Company for the five years ended December 31, 1996. The financial and
operating data for the year ended December 31, 1992 is derived from combined
financial statements of the "Deluxe Entities," predecessor companies of the
Registrant. The data should be read in conjunction with "Management's
Discussion and Analysis of Financial Position and Results of Operations" and
the consolidated financial statements of Crossmann Communities, Inc. and notes
thereto contained elsewhere in this Form 10-K.

Concurrent with the initial public offering of shares, the Company
acquired the Deluxe Entities, an unrelated company operating in Columbus,
Ohio called Deluxe Homes of Columbus, Inc. and the newly formed Crossmann
Mortgage Corp. The unaudited pro forma information presented for 1993 shows
the results of operations as though the initial public offering, termination
of the S corporation elections, acquisitions of the Deluxe Entities, Deluxe
Homes of Columbus, Inc., and Crossmann Mortgage Corp. occurred at the
beginning of the year.

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(in thousands, except per share and operating data)

Year Ended December 31,

1992 1993 1994 1995 1996
STATEMENT OF OPERATIONS DATA:
Sales $59,360 $83,750 $112,140 $177,590 $229,485
Gross Profit 13,494 18,575 24,494 35,704 48,051
Income from operations 5,741 10,540 12,566 18,621 24,854
Income before income taxes 5,858 10,649 12,791 18,630 24,668
Income taxes (1) 700 5,040 7,519 9,603
Net income 9,949 7,750 11,111 15,065
Net income per common share 1.28 1.83 2.47

Pro forma sales (2) 91,597 112,140 177,590 229,485
Pro forma net income (2) 6,445 7,750 11,111 15,065
Pro forma net income per common share (2) 1.06 1.28 1.83 2.47
Pro forma average common shares
outstanding 6,070 6,070 6,075 6,100

OPERATING DATA:
Number of closings (3) 616 852 1,073 1,675 2,068
Pro forma number of closings 938
Average home sales price $95,909 $97,400 $104,250 $106,024 $110,970
Homes in backlog (3) 219 366 345 757 1,006

BALANCE SHEET DATA:
Cash $ 357 $ 3,651 $ 5,233 $ 100
Inventories and properties
held for development or sale 17,206 34,976 54,667 69,683 113,202
Total assets 19,079 44,621 62,026 83,954 128,336
Notes Payable 3,311 11,583 20,554 25,472 48,464
Total shareholders' equity 9,289 25,267 33,011 44,212 59,649
<FN>

(1) Prior to October 26, 1993, the Deluxe Entities were S Corporations and therefore
made no provision for income taxes.

(2) 1993 financial data includes pro forma adjustments for the initial public offering,
acquisitions of the Deluxe Entities and Deluxe Homes of Columbus, Inc., the acquisition of
land, and a provision for income taxes calculated using an assumed rate of 40%. The 1994,
1995, and 1996 data reflect actual results.

(3) A home is included in "closings" when title is transferred to the buyer. Sales
and cost of sales for a house are recognized at the date of closing. A home is included in
"backlog" after a sales contract is executed and prior to the transfer of title to the
purchaser. Because the closings of pending sales contracts are subject to contingencies,
no assurances can be given that homes in backlog will result in closings.

</TABLE>

<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

OVERVIEW

Certain statements in this section are "forward-looking statements"
within the meaning of the Private Securities Litigation Act of 1995. Such
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results to differ materially. Such risks,
uncertainties and other factors include, but are not limited to the factors
described below.

During the five-year period ended December 31, 1996, the Company's sales
increased at an average compound annual rate of 40.5% per year, from $59.4
million in 1992 to $229.5 million in 1996. Income before income taxes
increased at an average compound annual rate of 44.75%, from $5.9 million in
1992 to $24.7 million in 1996. During the three years since the Company's
initial public offering of shares, net income increased at an average compound
annual rate of 33%, and shareholders' equity increased from $9.3 million as
of December 31, 1992 to $59.6 million as of December 31, 1996.

While Crossmann's management is committed to growing the Company in a
controlled and profitable manner, there are many factors outside the Company's
control. The Company's business and the homebuilding industry in general are
subject to changes in economic conditions, including but not limited to
employment levels, interest rates, the availability of credit, and consumer
confidence. The Company's success over the past several years has been
influenced by a variety of factors including favorable economic conditions in
its principal markets, the availability of capital for expansion, and low
interest rates. To the extent these conditions do not continue, the Company's
operating results may be adversely affected. The growth in the Company's
sales is principally attributable to increased unit sales, as price increases
have been moderate. Future increases in sales and profitability will be
largely dependent upon the ability of management to expand the Company's
operations in its current markets or in any new markets and continued control
of operating costs.

There can be no assurance that these trends will continue, nor can there
be any assurance that the Company will be able to successfully transfer its
business strategy to new market areas, that new markets will offer the
opportunities and stability of the Company's existing markets, that government
sponsored mortgage programs will not be changed or withdrawn, or that interest
rates will not change substantially.

RESULTS OF OPERATIONS
<TABLE>

The following table sets forth certain data relating to the operations of
the Company for the years ended December 31, 1994, 1995 and 1996:

December 31
------------
1994 1995 1996
----------- ------------ ------------

Closings (for the period ended) 1,073 1,675 2,068
Homes in backlog . . . . . . . . . . . 345 757 1,006
Aggregate sales value in backlog $36,258,810 $ 79,598,550 $108,084,640
Average sales price of backlog. $ 105,098 $ 105,150 $ 107,440
</TABLE>

Management believes that a substantial portion of the homes in backlog at
December 31, 1996 will be closed prior to June 30, 1997, but because of
weather conditions, there can be no assurance as to the quarter in which such
closings will occur.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Sales increased by $51.9 million, or approximately 29.2% in 1996 over
1995. Sales were higher primarily as a result of increased unit sales; 2,068
units were sold in 1996 compared to 1,675 in 1995. Sales were up in all
divisions except Ft. Wayne where they were down slightly. Management
attributes increased volume in its markets to aggressive marketing programs
and to the comparatively high value of the product compared to others offered
in the marketplace. Average selling price was also higher, $110,970 in 1996,
compared to $106,024. The average selling price is higher because of the
higher contribution of sales from Ohio. In Crossmann's Ohio markets, most new
homes are sold with basements while in Indiana, most new homes are sold on a
slab foundation. The market preference for basements causes a higher selling
price in the Ohio divisions.

Gross profit increased by $12.3 million, or approximately 35%, for the
year, representing 20.9% of sales in 1996 as compared to 20.1% in 1995. The
increase in gross profit as a percentage of sales is attributable in part to
moderating interest rates resulting in lower contributions by the Company to
customers' mortgage loan discount points. The Company is permitted to
contribute up to six percent of the selling price toward closing costs,
origination fees, and discount points under FHA and VA financing rules, and is
more likely to make such contributions during periods of volatile interest
rates.

Selling, general and administrative expenses increased as a percentage
of sales from 9.6% in 1995 to 10.1% in 1996. Management believes that the
increase reflects higher general and administrative expenses incurred by the
newer homebuilding divisions in Southern Indiana and Louisville, Kentucky.
Management believes that higher volume in these divisions in 1997 will help to
offset this overhead in future periods.

Due primarily to the increase in unit sales, income before income taxes
for 1996 increased approximately $6 million over 1995, or 32.4%. This
represents an increase from 10.5% of sales in 1995 to 10.7% of sales in 1996.
Net income as a percentage of sales was 6.6% in 1996 compared to 6.3% in 1995.
Net income increased $3.9 million or 36%. The Company's effective tax rate
was 38.9% in 1996 as compared to 40.3% in 1995.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Sales increased by $65.5 million, or approximately 58% in 1995 over 1994,
primarily as a result of increased unit sales; 1,675 units were sold in 1995
compared to 1,073 in 1994. Sales were up in all divisions except Lafayette
where they were approximately flat. The Ft. Wayne and Cincinnati offices, in
their first full year of operation, contributed 116 and 159 closings,
respectively, compared with 12 and 13, respectively, in 1994. Management
attributes increased volume in its markets to aggressive marketing programs
and mortgage rate lock-ins provided to customers during a period of
fluctuating interest rates in the early part of the year, and consumer
confidence due to stable interest rates in the latter part of the year.

Gross profit increased by $11.2 million, or approximately 46% for the
year, representing 20.1% of sales in 1995 as compared to 21.8% in 1994. The
decrease in gross profit as a percentage of sales is attributable in part to
increased contributions by the Company to customers' mortgage loan discount
points. The Company is permitted to contribute up to six percent of the
selling price toward closing costs, origination fees, and discount points
under FHA and VA financing rules, and is more likely to make such
contributions during periods of volatile interest rates. It is likely the
Company will continue to make this expenditure to retain customers, when
interest rates fluctuate.

Selling, general and administrative expenses decreased as a percentage
of sales from 10.6% in 1994 to 9.6% in 1995. Management believes that the
decrease reflects increased income from the new homebuilding divisions in Ft.
Wayne and Cincinnati and Crossmann Mortgage Corp.; this higher income helps to
offset their related selling, general, and administrative overhead.

Due primarily to the increase in unit sales, income before income taxes
for 1995 increased approximately $6 million over 1994, or 46%. This
represents a decrease from 11.4% of sales in 1994 to 10.5% of sales in 1995.
Net income as a percentage of sales was 6.3% in 1995 compared to 6.9% in 1994.
Net income increased $3.4 million or 43%. The Company's effective tax rate
was 40.3% in 1995 as compared to 39.4% in 1994.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1996, Crossmann had cash balances of $100,000. It is the
Company's policy to minimize unemployed cash generated by operations.
Crossmann Mortgage Corp. is required by the Department of Housing and Urban
Development to have a minimum balance of cash or cash equivalents of $100,000.

The Company's primary uses of capital are home construction costs and the
purchase and development of land. Real estate inventories were approximately
$113.2 million or 88% of total assets at December 31, 1996 compared to
approximately $69.7 million or 83% of total assets at December 31, 1995. To
assure the future availability of developed lots for next year's operations,
from time to time in the normal course of business the Company contracts to
purchase a portion of its developed lots from outside developers. Total
commitments for these purchases was approximately $106 million at December 31,
1996. The purchases of these lots are subject to various conditions imposed
on both the sellers and the Company. Capital is also used to add and improve
equipment used in administering the business and for model home furnishings.

During 1996, cash expenditures were financed with cash from operations
and with borrowings from a $40 million unsecured line of credit with Bank One,
Indianapolis N.A. and its participant, NBD, Indianapolis N.A. The line of
credit bears interest at the bank's prime lending rate, but permits portions
of the outstanding balance to be committed for fixed periods of time at a rate
equal to LIBOR plus 2.4%. The credit facility matures March 31, 1998. For
most of the year the Company also had in place $25,000,000 in senior notes,
payable over nine years at an interest rate of 7.625%, held by the Minnesota
Mutual Life Insurance Company and Combined Insurance Company of America. On
December 21, 1996, the Company made its first scheduled reduction in the notes
of $2,777,778.

Both the note agreements and the bank line of credit require compliance
with certain financial and operating covenants and place certain limitations
on the Company's investments in land and unconsolidated joint ventures.
They also limit payments of cash dividends by the Company.

The notes and the modifications to the banks' credit agreement are
expected to provide adequate liquidity for planned internal growth and capital
expenditures. In the event that the Company seeks to accelerate growth
through the acquisition of large parcels of land or of other homebuilders,
additional capital may be necessary. The Company believes that such capital
could be obtained from banks or other financing alternatives, from the
issuance of additional shares, or from seller financing; however, there can be
no assurances that the Company would be able to secure the necessary capital.

INFLATION AND EFFECTS OF CHANGING PRICES

The Company historically has been able to raise sales prices by amounts
at least equal to its cost increases and accordingly has not experienced any
detrimental effect from inflation.

Housing demand, in general, is affected adversely by increases in
interest rates. If mortgage interest rates increase significantly, the
Company's sales of residential real estate could be adversely affected. In
addition, gross profit and net income can be affected as well because
Crossmann can assist buyers, subject to certain limitations by FHA and VA, by
paying a portion of a customer's points and closing costs needed to help in
securing a mortgage loan.
FUTURE TRENDS

Management believes the Company's profitability results in part from high
volume production in its markets. In 1997, management will focus on building
the kind of strong relationships with vendors and land sellers in its new
markets in Ohio and Kentucky that it enjoys in its more established markets in
central Indiana.

Management views land acquisition and zoning as the greatest challenges
to its business in years to come. The Company will continue to seek to
maximize the value of each parcel it purchases so that it can continue to
serve its core customer.

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Crossmann Communities, Inc.
and Subsidiaries

Index to Consolidated Financial Statements

<TABLE>

<S> <C>

Independent Auditors' Report 17-18
Consolidated Balance Sheets as of December 31, 1995 and 1996 19
Consolidated Statements of Income for the Years Ended December 31, 1994, 1995, and 1996 20
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1994,
1995, and 1996 21
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995, and 1996 22
Notes to Consolidated Financial Statements 23-29
- ------------------------------------------------------------------------------------------- -----
</TABLE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Crossmann Communities, Inc.

We have audited the accompanying consolidated balance sheets of Crossmann
Communities, Inc. and subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of income, shareholder's equity and cash flows
for each of the two years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The consolidated financial
statements of the Company for the year ended December 31, 1994 were audited by
other auditors whose report, dated February 1, 1995, except for the 1995
Transaction portion of Note 5 to the 1994 consolidated financial statements
as to which the date was March 28, 1995, expressed an unqualified opinion on
those consolidated statements.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and the significant estimates made by management,
as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such 1995 and 1996 consolidated financial statements present
fairly, in all material respects, the financial position of Crossmann
Communities, Inc. and subsidiaries as of December 31, 1995 and 1996, and the
results of their operations and their cash flows for each of the two years in
the period ended December 31,1996 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Indianapolis, Indiana
February 14, 1997

Report of Independent Auditors

The Board of Directors and Shareholders
Crossmann Communities, Inc.

We have audited the accompanying consolidated statements of income,
shareholder's equity, and cash flows of Crossmann Communities, Inc. for the
year ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of
operations and cash flows of Crossmann Communities, Inc. for the year ended
December 31, 1994, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Indianapolis, Indiana
February 1, 1995, except for the 1995 Transaction
portion of Note 5 to the 1994 financial statements
as to which the date is March 28, 1995

<TABLE>

Crossmann Communities, Inc
and Subsidiaries

Consolidated Balance Sheets

as of December 31, 1995 and 1996

1995 1996
----------- ------------
ASSETS
Cash and cash equivalents $ 5,232,950 $ 100,000
Retainages 604,973 1,151,700
Real estate inventories 69,682,696 113,202,107
Furniture and equipment, net 1,310,259 2,919,333
Investments in joint ventures 1,172,289 3,404,742
Goodwill, net 2,898,722 2,737,328
Other assets 3,052,587 4,821,259
----------- ------------
Total assets $83,954,476 $128,336,469
=========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $10,304,193 $ 14,110,634
Accrued expenses and other liabilities 3,966,255 5,250,256
Notes payable 25,472,321 49,326,220
----------- ------------
Total liabilities 39,742,769 68,687,110

Commitments and contingencies

Shareholders' equity:
Preferred shares, without par value:
Authorized shares - 10,000,000
No shares issued and outstanding
Common shares, without par value:
Authorized shares - 30,000,000
Issued and outstanding shares - 6,081,500 and 6,125,768
at December 31, 1995 and 1996, respectively 24,028,879 24,400,903
Retained earnings 20,182,828 35,248,456
----------- ------------
Total shareholders' equity 44,211,707 59,649,359
----------- ------------
Total liabilities and shareholders' equity $83,954,476 $128,336,469
=========== ============
<FN>

See accompanying notes.
</TABLE>

<TABLE>

Crossmann Communities, Inc.
and Subsidiaries

Consolidated Statements of Income

for the Years Ended December 31, 1994, 1995 and 1996

1994 1995 1996
------------- ------------- -------------

Sales of residential real estate $112,140,346 $177,589,906 $229,485,094
Cost of residential real estate sold 87,646,413 141,886,168 181,434,071
------------- ------------- -------------
Gross profit 24,493,933 35,703,738 48,051,023

Selling, general and administrative expenses 11,928,092 17,082,842 23,196,933
------------- ------------- -------------
Income from operations 12,565,841 18,620,896 24,854,090

Other income, net 710,101 687,389 853,896
Interest expense (485,246) (678,095) (1,039,251)
------------- ------------- -------------
224,855 9,294 (185,355)
------------- ------------- -------------
Income before income taxes 12,790,696 18,630,190 24,668,735
Income taxes 5,040,187 7,518,778 9,603,107
------------- ------------- -------------
Net income $ 7,750,509 $ 11,111,412 $ 15,065,628
============= ============= =============

Net income per common share $ 1.28 $ 1.83 $ 2.47

Weighted average number of common
shares outstanding 6,070,000 6,074,798 6,099,995
============= ============= =============
<FN>

See accompanying notes.
</TABLE>

<TABLE>

Crossmann Communities, Inc.
and Subsidiaries

Consolidated Statements of
Shareholders' Equity

for the Years Ended December 31, 1994, 1995 and 1996

Common Shares Retained
--------- ------------
Shares Amount Earnings Total
--------- ------------ ----------- ------------

Balance at January 1, 1994 6,070,000 $23,946,485 $ 1,320,907 $25,267,392
Net income 7,750,509 7,750,509
Additional public offering costs (6,731) (6,731)
------------ ------------
Balance at December 31, 1994 6,070,000 23,939,754 9,071,416 33,011,170
Net income 11,111,412 11,111,412
Sale of common shares 11,500 89,125 89,125
--------- ------------ ------------
Balance at December 31, 1995 6,081,500 24,028,879 20,182,828 44,211,707
Net income 15,065,628 15,065,628
Sale of common shares 44,268 372,024 372,024
--------- ------------ ------------
Balance at December 31, 1996 6,125,768 $24,400,903 $35,248,456 $59,649,359
========= ============ =========== ============

<FN>

See accompanying notes.
</TABLE>

<TABLE>

Crossmann Communities, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows

for the Years Ended December 31, 1994, 19945 and 1996 (See Notes 6 and 8)

1994 1995 1996
------------- ------------- -------------
OPERATING ACTIVITIES:
Net income $ 7,750,509 $ 11,111,412 $ 15,065,628
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation 271,599 397,769 539,443
Amortization 161,694 161,696 161,394
Deferred income taxes 2,353 (76,994) (169,308)
Cash provided (used) by changes in:

Retainages 94,657 (342,678) (525,387)
Real estate inventories (19,691,238) (15,015,713) (37,567,373)
Other assets (711,198) (340,196) (1,001,198)
Accounts payable 141,843 3,569,110 2,974,123
Accrued expenses and other liabilities 548,329 2,240,414 530,734
------------- ------------- -------------
Net cash provided (used) by operating activities (11,431,452) 1,704,820 (19,991,944)

INVESTING ACTIVITIES:
Purchases of furniture and equipment (1,072,453) (860,488) (2,023,660)
Proceeds from disposition of furniture and equipment 13,128 380,000 -0-
Investments in joint ventures (125,211) (734,500) (2,206,582)
Business acquisition -0- -0- (330,901)
------------- ------------- -------------
Net cash used by investing activities (1,184,536) (1,214,988) (4,561,143)

FINANCING ACTIVITIES:
Proceeds from bank borrowings 58,727,590 84,076,258 119,832,796
Principal payments on bank borrowings (46,642,156) (99,631,250) (97,534,584)
Payments on notes and long-term debt -0- -0- (3,250,099)
Proceeds from issue of senior notes -0- 25,000,000 -0-
Payment of deferred financing costs -0- (263,926) -0-
Payments on related party loan (3,114,003) (4,527,089) -0-
Proceeds from sale of common shares 89,125 372,024
Additional public offering costs (6,731) -0- -0-
------------- ------------- -------------
Net cash provided by financing activities 8,964,700 4,743,118 19,420,137
------------- ------------- -------------

Net increase (decrease) in cash and cash equivalents (3,651,288) 5,232,950 5,132,950
Cash and cash equivalents at beginning of year 3,651,288 5,232,950
------------- -------------
Cash and cash equivalents at end of year -0- $ 5,232,950 $ 100,000
============= ============= =============
<FN>

See accompanying notes.
</TABLE>

Crossmann Communities, Inc.
and Subsidiaries

Notes to Consolidated Financial Statements

for the Years Ended December 31, 1994, 1995 and 1996

1. BASIS OF PRESENTATION

Crossmann Communities, Inc. ("Crossmann" or the "Company") is engaged
primarily in the development, construction, marketing and sale of new
single-family homes for first time and first move-up buyers. The Company
also acquires and develops land for construction of such homes and originates
mortgage loans for the buyers. The Company operates in Indianapolis, Ft.
Wayne, and Lafayette, Indiana; Cincinnati, Columbus and Dayton, Ohio; and
Louisville, Kentucky.

2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation.
The consolidated financial statements include the accounts of all wholly-owned
subsidiaries. All significant intercompany accounts and transactions have
been eliminated. The Company also owns a 50% interest in certain
unconsolidated joint ventures, which were accounted for using the equity
method.

Accounting Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

Warranties are provided by the Company. Reserves of approximately $378,000
and $553,400 at December 31, 1995 and 1996, respectively, are recorded based
on historical trends of expenses incurred for repairs. The amount of the
warranty reserve is considered adequate; however, it is reasonably possible
that the reserves may not be sufficient for future claims.

Cash Equivalents
All highly liquid investments with maturities of three months or less when
purchased are considered to be cash equivalents.

Real Estate Inventories
Real estate inventories are stated at the lower of cost (specific
identification method) or net realizable value. In addition to direct land
acquisition, land development and housing construction costs, inventory costs
include interest, real estate taxes and related overhead costs of development
and construction which are capitalized in inventory during the development and
construction periods. Net realizable value represents estimates, based on
management's present plans and intentions, of sale price less development and
disposition cost, assuming that disposition occurs in the normal course of
business.

Goodwill
Goodwill, which was recorded in the acquisition of Deluxe Homes of Columbus,
Inc. and the minority interests in certain of the Deluxe Entities, is
amortized over twenty years using the straight-line method. Accumulated
amortization was approximately $352,400 and $513,800 at December 31, 1995 and
1996, respectively.

The Company adopted Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of ("SFAS No. 121") in the fourth quarter of 1995. SFAS No.
121 requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The Company,
using its best estimates based on reasonable and supportable assumptions and
projections, has reviewed long-lived assets and certain identifiable
intangibles to be held and used, and no impairment appears to exist as of
December 31, 1996. Adopting SFAS No. 121 had no material effect on the 1995
consolidated financial statements.

Furniture and Equipment
Furniture and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
respective assets ranging from 5 to 39 years. Accumulated depreciation is
approximately $1,120,700 and $1,644,700 at December 31, 1995 and 1996,
respectively. Repairs and maintenance costs are expensed as incurred.

Revenue Recognition
Revenue is recognized upon a formal closing and as title to the property
transfers to the buyer.

Income Taxes
Deferred tax assets and liabilities are computed based on differences between
the financial statement and income tax bases of assets and liabilities using
the enacted tax rate. Deferred income tax expense or benefit is based on the
change in assets and liabilities from period to period, subject to an ongoing
assessment of realization.

Per Share Disclosures
Net income per common share is calculated based on the actual weighted average
number of shares outstanding during the year. Common stock equivalents do not
have a dilutive effect on net income per common share.

3. FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, Disclosure About Fair
Value of Financial Instruments, defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The following summarizes the estimated fair values of
financial instruments and the major methods and assumptions used in estimating
such amounts:

Short-term financial instruments are valued at their carrying amounts included
in the consolidated balance sheets, which are reasonable estimates of fair
value due to the relatively short period to maturity. This applies to cash
and cash equivalents, retainages, certain other assets, accounts payable and
certain other liabilities.

Debt with variable interest rates is valued at carrying amounts which
approximate the fair value based on discounted future cash flows. The
carrying amount of senior notes payable at December 31, 1996, approximates the
fair value based upon debt instruments with similar terms and conditions.

4. REAL ESTATE INVENTORIES
<TABLE>

Real estate inventories at December 31 consist of:

1995 1996
----------- ------------

Residential homes under construction $34,808,900 $ 50,512,565
Land held for future development 10,297,886 16,644,887
Land under development 15,606,514 30,639,075
Purchased developed lots 3,093,133 8,456,435
Homes held for resale 1,301,469 939,770
Model homes 4,574,794 6,009,375
----------- ------------
$69,682,696 $113,202,107
----------- ------------
</TABLE>

The Company occasionally purchases homes from customers to facilitate the sale
of new homes. Such homes held for resale are recorded at the lower of cost or
market.

5. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

<TABLE>

The Company has entered into joint ventures with various land development
contractors and owns 50% or less in each venture. The joint ventures are
accounted for using the equity method. Aggregated condensed financial
information for unconsolidated joint ventures is as follows:

1994 1995 1996
---------- ---------- ----------

Revenue $1,803,452 $ 29,171 $ 518,372
Expenses 1,496,514 27,007 487,938
---------- ---------- ----------
Net Income $ 306,938 $ 2,164 $ 30,434
========== ========== ==========

Assets $1,772,338 $2,341,058 $7,962,009
Liabilities 896,760 726,250 3,627,019
---------- ---------- ----------
Equity $ 875,578 $1,614,808 $4,334,990
========== ========== ==========

</TABLE>

Assets of the joint ventures consist primarily of developed lots, land under
development and land held for future development. Revenue consists primarily
of residential lot sales. Investments in joint ventures include accounts
receivable from the joint ventures and certain lot deposits of approximately
$365,000 and $1,312,000 in 1995 and 1996, respectively. The Company purchased
lots from the joint ventures for $843,000 in 1994 and $217,000 in 1996.

6. CREDIT ARRANGEMENTS

<TABLE>

Notes payable consists of the following at December 31:

1995 1996
----------- -----------
Line of credit with banks, maximum $40,000,000, with interest payable
on funds committed for fixed periods at LIBOR (5.5% at December 31,
1996) plus 2.4% and on floating funds at the banks' prime rate (8.25%
at December 31, 1996), maturing in March 1998. $ -0- $25,842,000
Various notes payable repaid during 1996. 472,321 -0-
Various notes payable collateralized by land, with periodic principal
payments, maturing from May 1997 through November 2000, and
bearing interest at rates ranging from prime plus 1% to 8.25%. -0- 1,261,998

Senior notes payable, due December 2004 with annual principal
payments of $2,777,777, and quarterly interest payments at 7.625% per
annum. 25,000,000 22,222,222
----------- -----------
$25,472,321 $49,326,220
=========== ===========
</TABLE>

On December 22, 1995, the Company issued senior notes in the amount of $25
million, pari passu with its senior bank facility, payable over nine years
with interest payable quarterly at 7.625%. Proceeds, net of deferred
financing costs of approximately $264,000, were used to redeem outstanding
subordinated notes and outstanding bank debt. Concurrent with the issue of
the notes, the Company renegotiated its $40 million line of credit with the
banks to make covenants consistent with its senior note agreement covenants
and to extend the term to three years.

The senior note and line of credit agreements require a minimum current ratio,
a minimum fixed charge coverage ratio, a maximum ratio of debt to tangible
capital base, a maximum ratio of land to equity, and a maximum ratio of debt
to a borrowing base derived from inventory levels. The senior note agreement
requires a pre-payment premium in the event of early extinguishment of the
debt. Additionally, both credit agreements limit investment in unconsolidated
joint ventures, payments of cash dividends, and require express written
consent of the lenders for certain transactions.

Interest capitalized during real estate development and construction was
approximately $767,000, $1,299,700, and $2,155,400 for 1994, 1995, and 1996,
respectively.

Interest paid, including amounts capitalized, was approximately $1,427,000,
$1,977,800 and $3,194,655 in 1994, 1995, and 1996, respectively. The
weighted average interest rate on borrowings outstanding at December 31, 1995
was 7.64% and 7.83% at December 31, 1996.

<TABLE>

Scheduled maturities of the notes payable for each of the five years and
thereafter as of December 31, 1996 are as follows:

<S> <C>

1997 $ 3,249,633
1998 29,209,921
1999 2,877,778
2000 2,877,778
2001 2,777,778
Thereafter 8,333,332
-----------

$49,326,220
===========
</TABLE>

7. SHAREHOLDERS' EQUITY

The Company has authorized 10,000,000 preferred shares which remain unissued
at December 31, 1996. The Board of Directors of the Company has not yet
determined the preferences, qualifications, relative voting or other rights of
the authorized preferred shares.

The Company has incentive share option plans for employees and directors
pursuant to which 625,000 shares are reserved. The options were issued at
market prices on the grant date, became exercisable on the grant date or in
some cases three years from the grant date, and expire ten years after the
grant date. Details of stock options are as follows:

<TABLE>

Price per share 1994 1995 1996
-------- -------- --------
Beginning Balance 50,000 130,000 162,500
Options granted $ 7.75 - $17.75 90,000 74,000 60,500
Options exercised $ 7.75 - $9.00 (11,500) (24,208)
Options forfeited $ 7.75 - $17.75 (10,000) (30,000) (18,472)
-------- -------- --------
Ending Balance 130,000 162,500 180,300
======== ======== ========
Exercisable 120,000 152,500 170,300
======== ======== ========
</TABLE>

The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations in accounting for the plans. No
compensation cost has been recognized for the plans because the stock options
price is equal to fair value at the grant date. Had compensation cost for the
plans been determined based on the fair value at the grant dates for awards
under the plan consistent with the method of SFAS No. 123, Accounting for
Stock-Based Compensation, the Company's net income and net income per share
for the years ended December 31, 1995 and 1996 would have decreased to the pro
forma amounts indicated below:

<TABLE>

1995 1996
----------- -----------
Net income
As reported $11,111,412 $15,065,628
Pro forma $10,978,736 $14,829,416
Net income per share
As reported $ 1.83 $ 2.47
Pro forma $ 1.81 $ 2.43
</TABLE>

The fair value of the option grants are estimated on the date of grant using
an option pricing model with the following assumptions: no dividend yield,
risk-free interest rates of 6.07% to 7.13%, volatility of 39 to 42 and
expected lives of five years. The pro forma amounts are not representative
of the effects on reported net income for future years.

8. INCOME TAXES

<TABLE>

The reconciliation of income taxes computed at the U.S. federal statutory tax rate
to income tax expense for the years ended December 31, 1994, 1995 and 1996 is:

1994 1995 1996
---------- ---------- -----------

Tax at U.S. statutory rate $4,348,837 $6,520,567 $8,634,057
State income taxes, net of federal tax benefit 643,227 931,510 1,233,437
Other, net 48,123 66,701 (264,387)
---------- ---------- -----------
$5,040,187 $7,518,778 $9,603,107
========== ========== ===========
</TABLE>

<TABLE>

The following is a summary of the components of the provision for income
taxes:

1994 1995 1996
---------- ----------- -----------
Current tax expense:
Federal $4,063,248 $6,115,338 $8,014,453
State 974,586 1,480,434 1,757,962
---------- ----------- -----------
5,037,834 7,595,772 9,772,415
Deferred tax expense (benefit) 2,353 (76,994) (169,308)
---------- ----------- -----------
$5,040,187 $7,518,778 $9,603,107
========== =========== ===========
</TABLE>

Income taxes paid were $4,556,199, $6,233,382 and $7,570,365 during 1994, 1995
and 1996, respectively.

Deferred income taxes result principally from temporary differences in the
recognition of warranty expense for tax and financial reporting purposes. A
deferred tax asset of approximately $157,000 at December 31, 1995 and
$326,000 at December 31, 1996 is recorded for temporary differences. In the
opinion of management, it is more likely than not that the deferred tax asset
will be realized.

9. RELATED PARTY TRANSACTIONS

The Company is affiliated with several other companies, which have not been
consolidated herein, through common ownership. Transactions with the related
parties are made in the normal course of business.

Office and warehouse space at the Company's headquarters is leased from a
related party. During 1994, 1995 and 1996 approximately $100,000, $222,800
and $251,200, respectively, in rental payments were made.

Interest paid on debt from related parties was approximately $611,900 and
$447,000 for the years ended December 31, 1994 and 1995 respectively.

Prior to 1994 the Company sold new and existing homes to related parties.
Closing on sales of new and existing homes to related parties was $240,000 in
1994.

10. LEASES

The Company leases office and warehouse space, vehicles and office equipment
pursuant to operating lease agreements expiring from May 1999 to May 2001.
Annual minimum payments to be made to a related party incorporated in the
amounts below range from $284,435 in 1997 to $5,160 in 2001.
<TABLE>

Annual minimum operating lease payments due as of December 31, 1996 are as
follows:

<S> <C>

1997 $ 552,133
1998 494,851
1999 256,474
2000 136,614
2001 26,360
----------
$1,413,140
==========
</TABLE>

Rent expense was approximately $236,200, $314,800 and $479,100 for 1994, 1995,
and 1996, respectively.

11. EMPLOYEE BENEFITS

The Company's defined contribution savings plan covers substantially all
employees of the Company. Participants are allowed to make nonforfeitable
contributions up to limits established by the Internal Revenue Code. In 1995,
the Company matched in cash 50% of the first 6% of compensation contributed by
each participant, totalling $116,631. At December 31, 1995, the Company
declared a discretionary contribution of an additional 5.7% of compensation,
not to exceed 15% of all participants' compensation or $30,000 per individual.
This contribution was $322,510.

During 1996, the Company further amended the plan to permit investment by
employees in Crossmann common shares. The Company registered the shares to be
offered under the plan with the Securities Exchange Commission on Form S-8 on
March 22, 1996. In 1996, as in 1995, the Company matched in cash 50% of the
first 6% of compensation contributed by each participant, totalling $114,835.
On December 31, 1996, the Company declared a discretionary profit sharing
contribution of approximately $340,000 payable in the Company's common
shares. This contribution was the maximum amount deductible by the Company
under the rules set forth in section 404(a)(3) of the Internal Revenue Code.

Prior to 1995, the Company maintained a Simplified Employee Pension Plan for
certain employees. This defined contribution plan covered employees at least
21 years of age who worked for the Company at least three years, and permitted
discretionary contributions for eligible employees up to 15% of the first
$150,000 of compensation per employee. The contribution for 1994 was
$251,600.

12. COMMITMENTS AND CONTINGENCIES

To assure the future availability of various developed lots, in the normal
course of business, the Company has contracted to purchase developed lots.
Total commitments for these purchases were approximately $106 million at
December 31, 1996. The purchase of these lots is subject to various
conditions imposed on both the sellers and the Company.

The Company from time to time is involved in routine litigation incidental to
its business. The Company does not believe that any liabilities resulting
from litigation to which it is a party will materially affect the Company's
financial position and results of operations.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On August 25, 1995, Crossmann's Board of Directors dismissed Ernst & Young LLP
as the Company's independent accountant. None of the reports of Ernst & Young
LLP on the financial statements of the Company contained an adverse opinion or
a disclaimer of opinion or were qualified or modified as to uncertainty,
accounting scope or accounting principles. There was no disagreement between
the Company and Ernst & Young LLP on any matter of accounting principle or
practice, financial statement disclosure, or audit scope. On September 12,
1995, Deloitte & Touche LLP was engaged as principal accountant. Notice of
this change was reported on Forms 8-K filed August 30, 1995 and September 12,
1995.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
<TABLE>

The Directors, executive officers and certain significant
employees of the Company are set forth in the following table.

Years with
Name Age Company Present Position(s)
John B. Scheumann 48 21 Chairman of the Board of Directors
and Chief Executive Officer

Richard H. Crosser 58 24 President and Chief Operating Officer;
Director

Jennifer A. Holihen 38 14 Chief Financial Officer; Treasurer;
Secretary; Director
John M. Moody 58 5 Vice President and General Manager--
Indianapolis Division
Charles F. Holle 56 14 Vice President and General Manager--
Lafayette Division
Steven M. Dunn 43 3 Vice President and General Manager--
Columbus Division
Lynn R. Cooper 57 8 Vice President and General Manager--
Fort Wayne Division
Ronald W. Rooze 57 3 Vice President and General Manager--
Cincinnati/Dayton Division

James C. Shook 65 3 Director

Larry S. Wechter 41 3 Director

</TABLE>

Mr. Scheumann has been the Company's Chairman of the Board of Directors
and Chief Executive Officer since 1992 and has served as a senior executive
officer since joining the Company in 1977. Before joining the Company, Mr.
Scheumann was employed by National Homes Construction Corp. for three years in
a variety of capacities, last serving as Division Controller for Multi-Family
Construction.

Mr. Crosser has been the Company's President and Chief Operating Officer
since 1992 and serves on its Board of Directors and has served as a senior
executive officer since joining the Company in 1974. Prior to 1974, Mr.
Crosser was employed by National Homes Construction Corp. for 15 years in a
variety of capacities, last serving as a regional manager of the company.

Ms. Holihen has been the Chief Financial Officer, Secretary, and
Treasurer since September 1993 and serves on its Board of Directors. Ms.
Holihen served as controller for the Company from 1983 until 1993. Ms.
Holihen is a Certified Public Accountant and received her MBA in accounting
and management information systems from Indiana University in 1987.

Mr. Moody joined the Company in 1992 and assumed responsibility for the
entire Indianapolis Division in March 1994. From March 1990 to February 1992,
Mr. Moody was the President and Chief Executive Officer of Southern Cross
Lumber & Millwork Company. From October 1985 through March 1990, Mr. Moody
was Vice President of Pease Co. From 1978 through 1985, Mr. Moody was a Vice
President of National Homes Construction Corp.

Mr. Holle has been the General Manager of the Company's Lafayette
Division since April 1995, prior to which he served as Sales Manager since
1983. Before joining the Company, Mr. Holle was a sales manager for General
Homes of Lafayette, Indiana.

Mr. Dunn has been the Company's Vice President and the General Manager of
its Columbus, Ohio Division and the President of Crossmann Communities of
Ohio, Inc. since October 1993. Mr. Dunn was the sole shareholder and
president of Deluxe Homes of Columbus, Inc. from 1987 until the acquisition by
the Company in 1993.

Mr. Cooper established the Company's Ft. Wayne Division in March 1994.
He was General Manager of the Company's Indianapolis division from March
1991 until March 1994 and a Project Manager in Indianapolis from November
1989 to March 1991. Prior to joining the Company, Mr. Cooper was General
Manager for Equity Builders.

Mr. Rooze has been the Company's Vice President and the General Manager
of its Cincinnati, Ohio Division since May 1994. In 1996, he assumed added
responsibilities for establishing the Dayton Division. Prior to joining the
Company, Mr. Rooze was President and owner of Westron, Inc., a custom
homebuilding and remodeling business in Washington D.C.

Mr. Shook was elected to Crossmann's Board of Directors by the Board of
Directors in March 1994. Mr. Shook is President of The Shook Agency, Inc., a
real estate brokerage firm in Lafayette, Indiana specializing in commercial
and industrial sales and leasing. Mr. Shook's other corporate affiliations
include directorships of NBD Indiana, Inc., Indiana Energy Inc. (Indiana Gas
Company), and Lafayette Life Insurance Company. Community service includes
past and present directorships of The Indiana Chamber of Commerce, The Greater
Lafayette Chamber of Commerce, Great Lafayette Progress, Inc., United Way,
Lafayette Home Hospital, The Purdue Foundation, Dean's Advisory Committee,
Krannert School of Management at Purdue University, Greater Lafayette Museum
of Art, YWCA Foundation, and the Greater Lafayette Community Foundation.

Mr. Wechter is one of the founders and the former President and director
of ADESA Corporation. ADESA Corporation was once a publically held company;
today it is a wholly owned subsidiary of Minnesota Power & Light (NYSE: MPL),
a diversified utility based in Duluth, Minnesota. ADESA owns and operates
auto auctions and performs related services throughout the United States and
Canada. Mr. Wechter now serves as Managing Director of Monument Advisors, an
investment bank based in Indianapolis and is a member of Eagle Investments I,
LLC, a private investment company. Mr. Wechter was elected to Crossmann's
Board of Directors on May 25, 1994.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the Company's four other highest-paid executive
officers for services rendered in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 1996, 1995, and 1994,
respectively.
<TABLE>

Summary Compensation Table

Annual Compensation Long
Term Compensation

Other Options/ All Other
Salary Bonus Compensation SARs Compensation (1)
Name and Principal Position Year ($) ($) ($) (#) ($)
John B. Scheumann, Chairman 1996 166,000 249,000 508 None 18,715
and Chief Executive Officer 1995 157,500 157,500 925 18,232
1994 150,000 150,000 1,240 22,500
Richard H. Crosser, President 1996 166,000 249,000 1,171 None 18,715
and Chief Operating Officer 1995 157,500 157,500 1,037 18,232
1994 150,000 150,000 1,045 22,500
John M. Moody, Vice President 1996 82,500 125,000 2,075 5,000 18,715
and General Manager, 1995 78,750 112,500 2,477 12,500 18,223
Indianapolis Division 1994 75,000 102,500 2,970 10,000 -0-
Steve M. Dunn, Vice President 1996 100,320 60,000 614 -0- 18,715
and General Manger, Columbus 1995 100,320 -0- 597 -0- 11,044
Division 1994 100,320 10,000 635 -0- 3,029
Ronald W. Rooze, Vice President 1996 80,000 80,000 1,464 5,000 18,715
and General Manger, Cincinnati 1995 70,000 70,000 1,457 10,000 15,161
Division 1994 56,973 10,000 898 5,000 -0-

<FN>

(1) Represents contributions by the Company to the named individual's profit sharing pension plan.
</TABLE>

Stock Options

The Company issued options to purchase 60,500 shares to employees on
March 13, 1996 at an exercise price of $17.75 per share, which was the market
price on the date of grant. Those options become exercisable at the issue
date and expire 10 years after the date of grant.

The following table sets forth the benefits allocated under the Outside
Director Plan and the Employee Option Plan (collectively, the "Plans") for the
fiscal year ended December 31, 1996 to each of the named executive officers;
all current executive officers as a group; all current directors who are not
executive officers as a group; and all employees, including all current
officers who are not executive officers, as a group. The amount of such
benefits are not necessarily indicative of the amounts that will be granted in
the future. The closing sale price of a Common Share at the close of business
on March 12, 1997 was $19.75.
<TABLE>

Option Grants in Last Fiscal Year

Employer Outside Director

Option Plan Option Plan
Name Number of Units Number of Units

John B. Scheumann -0- --
Richard H. Crosser -0- --
John M. Moody 5,000 --
Steve M. Dunn -0- --
Ronald W. Rooze 5,000 --

All Other Executive Officers 15,000 --
as a Group

All Directors who are not Executive Officers 2,000

All non-Executive Officers
and Employee as a Group 33,500* --

<FN>

* Options to purchase 58,500 shares were granted under the Company's
Employee Stock Option plan on March 13, 1996. One employee forfeited his
option grant of 5,000 shares by leaving the Company prior to exercising his
option. Options still outstanding from the 1996 grant total 53,500.
</TABLE>

The following table contains information concerning the grant of stock
options under the Company's Employee Option Plan to the named executive
officers and groups indicated. The table also lists potential realizable
values of such options on the basis of assumed annual compounded appreciation
rates of 5% and 10% over the life of the options, which are set at a maximum
of 10 years.

<TABLE>

Option Grants in Last Fiscal Year

% of Total Options Exercise
Options Granted to Price Expiration
Name Granted(#) Employees in 1996 (S/share) Date 5%($) 10%($)
John B. Scheumann -0- -0- --- --- --- ---
Richard H. Crosser -0- -0- --- --- --- ---
- ------------------
John M. Moody 5,000 9 17.75 03/02/06 144,564 230,195
Steve N. Dunn -0- -0- --- --- --- ---
Ronald W. Rooze 5,000 9 17.75 03/02/96 144,564 230,195

<FN>

* Options to purchase 58,500 shares were granted under the Company's Employee Stock
Option plan on March 13, 1996. One
employee forfeited his option grant of 5,000 shares by leaving the Company prior to
exercising his option. Options still outstanding from the 1996 grant total 53,500.
</TABLE>

<TABLE>

The following table provides information with respect to the named executive officers and groups
indicated concerning the unexercised options held as of the end of the last fiscal year.

Value of Unexercised Options at
Shares Number of Options Yearend: Market Price of
Acquired on Value Realized: Market Unexercised at 17.00 - exercise price of $9.00,
Name Exercise Price of $17.00 December 31, 1996 9.50, $7.75 and $17.75

John M. Moody 2,191 $ 37,247 25,000 $ 273,750
Steve M. Dunn -- -- -- --
Ronald W. Rooze 4,000 $ 68,000 16,000 $ 180,250
- --------------- ----------- ----------------------- ----------------- ---------------------------------

</TABLE>

Employment Contracts

On September 1, 1993, Crossmann entered into a five-year employment
agreement with Steven M. Dunn, the sole shareholder of Deluxe Homes of
Columbus, Inc. in connection with the acquisition of that company by
Crossmann. Pursuant to the terms of this employment agreement, Mr. Dunn
manages the Columbus division and serves as an officer of Crossmann and
receives an annual salary of $100,000 and is permitted to participate in the
Company's benefit plans, its bonus program and the Employee Option Plan.

Director Compensation

Non-employee members of the Board are each paid an annual retainer fee of
$10,000 plus a fee of $500 per Board meeting, and are reimbursed for all
out-of-pocket costs incurred in connection with their attendance at such
meetings. Upon joining the Board, each non-employee Board member is eligible
to receive a grant of an option to purchase 1,000 Common Shares pursuant to
the Company's Outside Directors' Stock Option Plan.

In 1996, James Shook and Larry Wechter each received the annual retainer
and $500 for each of the four Board meetings they attended. Options to
purchase 1,000 Crossmann shares were granted to James Shook and Larry Wechter
upon the anniversary of their election to the Board of Directors.

Compensation Committee Interlocks and Insider Participation

Salaries, bonuses, profit sharing contributions to the pension plan and
option grants are proposed by management and approved by the Compensation
Committee. Messrs. Scheumann and Crosser, and Ms. Holihen do not participate
in setting their personal salaries, bonuses or option grants.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information regarding the beneficial
ownership of the Company's Common Shares as of March 12, 1997 by (i) each
person who is known to the Company to own beneficially more than 5% of the
outstanding shares of Common Shares of the Company, (ii) each director, (iii)
each officer listed in the Summary Compensation Table in this Form 10-K and
(iv) all directors and executive officers as a group. All shares are subject
to the named person's sole voting and investment power except where otherwise
indicated.
<TABLE>

Percent of
Number of Shares Common
Name (1) Beneficially Owned Shares (2)
John B. Scheumann, Chairman and CEO 1,743,000 28.50
Richard H. Crosser, President, COO, Director (3) 1,479,600 24.15
Steve M. Dunn, Vice President 91,000 1.50
James C. Shook, Director 5,000 *
Larry S. Wechter, Director (4) 3,500 *
John M. Moody, Vice President 11,591 *
Ronald W. Rooze, Vice President 4,000 *

All directors and executive officers
as a group (10 persons) 3,433,699 56.05

<FN>

* Denotes less than 1%

(1) The address of each beneficial owner is 9202 North Meridian Street, Indianapolis,
Indiana, 46260.
(2) There are 6,125,768 shares issued and outstanding at March 12, 1997.
(3) All of the 1,479,600 shares owned beneficially by Mr. Crosser are owned by the
Richard H. Crosser Living Trust, arevocable trust established by Mr. Crosser on February
25, 1992. The beneficiaries of the trust are Mr. Crosser's children. Mr. Crosser is the
trustee of the trust.
(4) Five hunderd of the shares owned beneficially by Mr. Wechter are owned by the Penn
Meridian Foundation, a trust established by Mr. Wechter on December 11, 1995. Mr.
Wechter and Janis Wechter are co-trustees of thet trust.

</TABLE>

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company had business dealings with certain affiliates, including its
Chairman of the Board and CEO, John B. Scheumann and its President and COO,
Richard H. Crosser and entities with which they were affiliated prior to its
initial public offering in October 1993. Since its initial public offering ,
the policy of the Company has been to require that such transactions be on
terms not less favorable to the Company than reasonably available from
unrelated third parties and that they be approved by a majority of the
disinterested members of the Board of Directors of the Company.

A summary of Certain Relationships and Related Transactions between the
Company and affiliates that occurred after January 1, 1995 is set forth below.

Previously taxed income. Prior to its initial public offering, Crossmann
Communities, Inc. and the Deluxe Entities were treated as S Corporations. As
a result, the net taxable incomes of the Deluxe Entities through October 25,
1993 were taxed, for federal and some state income tax purposes, directly to
the individual shareholders. On October 26, 1993, Crossmann and all of the
Deluxe Entities terminated their status as S Corporations and became C
Corporations, thereafter subject to federal and state income taxes. Prior to
the termination of S Corporation status, the Deluxe Entities distributed to
their existing shareholders an amount equal to their previously taxed but
undistributed S Corporation earnings and $886,000 in additional paid in
capital originally invested by those shareholders. The aggregate amount
distributed at closing was $12,634,826, $4,993,734 in cash and $7,641,092 in
Subordinated Notes.

The Subordinated Notes bore interest at 1.5% above the prime rate of Bank
One, Indianapolis, N.A. which was 8.75% as of December 22, 1995, and were
payable in four equal annual installments commencing on the first anniversary
date of the closing of Crossmann's initial public offering. On December 22,
1995, the Company used a portion of proceeds of its senior note issue to repay
the outstanding balance of the notes, then $2,684,726, with the approval of
the non-employee members of the Company's Board of Directors.

The Company and Messrs. Scheumann and Crosser are parties to a Tax
Indemnification Agreement dated September 1, 1993, relating to their
respective income tax liabilities. Subject to certain limitations, the
agreement generally provides that Messrs. Scheumann and Crosser will be
indemnified by the Company and the Company will be indemnified by Messrs.
Scheumann and Crosser with respect to certain federal and state income taxes
(plus interest and penalties) shifted between Messrs. Scheumann and Crosser
and the Company for taxable years ending either before or after the closing of
the initial public offering as a result of adjustments to tax returns of
Messrs. Scheumann and Crosser and the Company, plus any taxes on such
payments, based on a blended tax rate. The income and expenses, and the
related distributions, of the Company for fiscal 1993 were determined by an
allocation based on a closing of the books of the Company as of the closing of
the initial public offering on October 25, 1993.

Lease of Office Space. The Company leases approximately 20,000 square
feet of office space for its headquarters, and an additional 4,000 square feet
for its mortgage brokerage subsidiary, and 5,000 square feet of warehouse
space at 9202 North Meridian Street in Indianapolis, Indiana from Pinnacle
Properties LLC, an entity owned by principal shareholders John B. Scheumann
and Richard H. Crosser. The monthly rent on these leases is $23,703. The
Company relocated its headquarters to this building in May 1994.

PART IV

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

(a) Documents filed with this Report. See Index to Consolidated Financial
Statements included in this report. See Item 14(d) for an index of the
supplementary financial statement schedule included in this report.

(b) Reports on Form 8-K. None.
<TABLE>

<S> <C>

Exhibit Number Description of Exhibit

3.1 Amended and restated Articles of Incorporation of Crossmann Communities,
Inc. (Incorporated by reference to Exhibit 3.1 to Form S-1 Registration
Statement No. 33-68396.)
3.2 Bylaws of Crossmann Communities, Inc. (Incorporated by reference to Exhibit
3.2 to Form S-1 Registration Statement No. 33-68396.)
4.1 Specimen Share Certificate for Common Shares. (Incorporated by reference
to Exhibit 2.9 to Form S-1 Registration Statement No. 33-68396.)
10.1 Tax Indemnification Agreement dated September 1, 1993, among Crossmann
Communities, Inc., John Scheumann and Richard H. Crosser, as sole trustee
of the Richard H. Crosser Living Trust. (Incorporated by reference to Exhibit
10.1 to Form S-1 Registration Statement No. 33-68396.)
10.2 1993 Outside Director Stock Option Plan. (Incorporated by reference to
Exhibit 10.2 to Form S-1 Registration Statement No. 33-68396.)
10.3 1993 Employee Stock Option Plan. (Incorporated by reference to Exhibit 10.3
to Form S-1 Registration Statement No. 33-68396.)
10.4 Partnership Agreement of Mark Anthony Partnership, dated April 17, 1991.
(Incorporated by reference to Exhibit 10.6 to Form S-1 Registration Statement
No. 33-68396.)
10.8 Form of Subordinated Note issued to John Schuemann and Richard H. Crosser,
as sole trustee of the Richard H. Crosser Living Trust. (Incorporated by
reference to Exhibit 10.10 to Form S-1 Registration Statement No. 33-68396.)
10.10 Share Purchase Agreement, dated October 7, 1993, by and among John
Scheumann, Richard Crosser and Crossmann Communities, Inc. (Incorporated
by reference to Exhibit 10.12 to Form S-1 Registration Statement No. 33-
68396.)
10.14 Employee Stock Option Agreement, dated December 16, 1993 by and between
Crossmann Communities, Inc. and John Moody. (Incorporated by reference
to Exhibit 10.14 to Form 10-K dated March 24, 1994.)
10.17 Employee Stock Option Agreement, dated June 28, 1994 by and between
Crossmann Communities, Inc. and John Moody. (Incorporated by reference
to Exhibit 10.17 to Form 10-K dated March 24, 1995.)
10.20 Director Stock Option Agreement, dated May 25, 1994 by and between
Crossmann Communities, Inc. and James C. Shook. (Incorporated by
reference to Exhibit 10.20 to Form 10-K dated March 24, 1995.)
10.21 Director Stock Option Agreement, dated May 25, 1994 by and between
Crossmann Communities, Inc. and Larry S. Wechter. (Incorporated by
reference to Exhibit 10.21 to Form 10-K dated March 24, 1995.)
10.26 Non-standardized Joinder Agreement for McCready and Keene, Inc. 401(k)
Basic Regional Prototype Plan (with Revised Options) for Crossmann
Communities, Inc. (Incorporated by reference to Exhibit 10.26 to Form 10-Q
dated May 10, 1995.)
10.27 McCready and Keene, Inc. 401(k) Basic Regional Prototype Plan Basic Plan
Document #03. (Incorporated by reference to Exhibit 10.27 to Form 10-Q
dated May 10, 1995.)
10.28 Trust Agreement for Crossmann Communities, Inc. 401(k) Profit Sharing Plan,
by and between Crossmann Communities, Inc. and Richard H. Crosser, John
Scheumann, and Jennifer Holihen, Trustees. (Incorporated by reference to
Exhibit 10.28 to Form 10-Q dated May 10, 1995.)
10.31 Employee Stock Option Agreement, dated June 28, 1994 by and between
Crossmann Communities, Inc. and Ronald W. Rooze. (Incorporated by
reference to Exhibit 10.31 to Form 10-K dated March 20, 1996.)
10.32 Employee Stock Option Agreement, dated March 2, 1995 by and between
Crossmann Communities, Inc. and John Moody. (Incorporated by reference
to Exhibit 10.35 to Form 10-K dated March 20, 1996.)
10.34 Employee Stock Option Agreement, dated March 2, 1995 by and between
Crossmann Communities, Inc. and Ronald W. Rooze. (Incorporated by
reference to Exhibit 10.34 to Form 10-K dated March 20, 1996.)

10.35 Director Stock Option Agreement, dated May 18, 1995 by and between
Crossmann Communities, Inc. and James C. Shook. (Incorporated by
reference to Exhibit 10.35 to Form 10-K dated March 20, 1996.)
10.36 Director Stock Option Agreement, dated May 18, 1995 by and between
Crossmann Communities, Inc. and Larry S. Wechter. (Incorporated by
reference to Exhibit 10.36 to Form 10-K dated March 20, 1996.)
10.37 Note Agreement dated as of December 19, 1995, $25,000,000 7.625% Senior
Notes due December 19, 2004, by Crossmann Communities, Inc. et al.
(Incorporated by reference to Exhibit 10.37 to Form 10-K dated March 20, 1996.)
10.38 7.625% Senior Note due December 19, 2004, issued to Combined Insurance
Company of America by Crossmann Communities, Inc. et al. (Incorporated
by reference to Exhibit 10.39 to Form 10-K dated March 20, 1996.)
10.39 7.625 % Senior Note due December 19, 2004, issued to The Minnesota Mutual
Life Insurance Company by Crossmann Communities, Inc. et al. (Incorporated
by reference to Exhibit 10.39 to Form 10-K dated March 20, 1996.)
10.4 Amended and Restated Credit Agreement, dated December 22, 1995, by and
between Crossmann Communities, Inc. and Bank One, Indianapolis, N.A.
(Incorporated by reference to Exhibit 10.40 to Form 10-K dated March 20,
1996.)
10.43 Employee Stock Option Agreement, dated March 13, 1996 by and between
Crossmann Communities, Inc. and John Moody.
10.44 Employee Stock Option Agreement, dated March 13, 1996 by and between
Crossmann Communities, Inc. and Ronald W. Rooze.
10.45 Director Stock Option Agreement, dated March 13, 1996 by and between
Crossmann Communities, Inc. and Larry S. Wechter.
10.46 Director Stock Option Agreement, dated March 13, 1996 by and between
Crossmann Communities, Inc. and James C. Shook.
11.1 Computation of Per Share Net Income for the Year Ended December 31, 1996.

16.1 Letter from Ernst & Young to Securities and Exchange Commission, dated
September 5, 1995, regarding a change in Registrant's certifying accountants.
(Incorporated by reference to Exhibit A to Form 8-K filed with the Securities
and Exchange Commission September 12, 1995.)
19.1 Lease by and between Pinnacle Properties LLC ("Landlord") and Crossmann
Communities, Inc. ("Tenant"), 9202 North Meridian Street, Suite 300,
Indianapolis, Indiana 46260, executed April 18, 1994. (Incorporated by
reference as Exhibit 19.1 to Form 10-Q filed with the Securities and Exchange
Commission August 12, 1994.)
21.1 Subsidiaries of the registrant. (Incorporated by reference to Exhibit 21.1 to
Form S-1 Registration Statement No. 33-68396.)
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
27.3 Financial Data Schedule for the year ended December 31, 1996.

</TABLE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

CROSSMANN COMMUNITIES, INC.

By /s/ John B. Scheumann
Chairman and Chief Executive Officer

Dated: March 12,1997

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report been signed below by the following persons on behalf of the
registrant and in the capacities on the dated indicated.

<TABLE>

Signature Title Date
/s/ John B. Scheumann Chairman of the Board of
Directors; Chief Executive Officer March 12, 1997
/s/ Richard H. Crosser Director; President and Chief
Operating Officer March 12, 1997
/s/ Jennifer A. Holihen Director; Chief Financial Officer;
Treasurer; Secretary; Principal
Financial and Accounting Officer March 12, 1997
/s/ James C. Shook Director March 12, 1997
/s/ Larry S. Wechter Director March 12, 1997
- ----------------------- ---------------------------------- --------------

</TABLE>

Exhibit 10.43

CROSSMANN COMMUNITIES, INC.

EMPLOYEE STOCK OPTION AGREEMENT

THIS AGREEMENT made this thirteenth day of March, by and between
Crossmann Communities, Inc., an Indiana corporation (the "Company") and John
M. Moody (the "Optionee"), pursuant to the terms, conditions and limitations
contained in the Employee Stock Option Plan, attached hereto and made a part
hereof and as it may be amended from time to time hereafter (the "Plan");

WHEREAS, the Board has determined that it is in the best interest of the
Company and appropriate to the stated purposes of the Plan, that the Company
grant to the Optionee an option to purchase shares of Common Stock of the
Company pursuant to the terms and conditions of the Plan and this Agreement,

NOW, THEREFORE, the Company and the Optionee do hereby agree as follows:

1. Grant of Option. The Company hereby grants to the Optionee the
right and option to purchase, pursuant to the terms and conditions contained
herein and in the Plan, all or any part of an aggregate of 5,000 shares of the
Common Stock of the Company (the "Option").

2. Option Price. The Option price hereunder is $17.75 per share (the
"Option Price") which Option Price is equal to one hundred percent (100%) of
the fair market value of the Common Stock on the date of grant of the Option
(the "Grant Date") under this Agreement, as determined under the terms of the
Plan.

3. Exercise of Option. The Option shall be exercisable as of March
13, 1996, and shall continue to be exercisable subject to the provisions of
Section 4, 6 and 7, until the tenth anniversary of the Grant Date (the
"Expiration Date").

(a) Method of Exercise. The Option shall be exercised by
written notice, which shall:

(i) state the election to exercise the Option, the number
of shares inrespect of which it is being exercised, the person(s) in whose
name(s) the stock certificate(s) for such shares is (are) to be registered,
including pertinent address(es) and Social Security Number(s);

(ii) contain such representations and agreements, if any,
as may be required by the Company's counsel relative to the holder's
investment intent regarding such shares;

(iii) be signed by the Optionee; and

(iv) be in writing and delivered in person or by certified
mail to the Chairman of the Board of the Company.

The Option may not be exercised if the issuance of the shares upon
such exercise could constitute a violation of any applicable Federal or state
securities or other law or valid regulation. As a condition to his exercise
of the Option, the Company may require the person exercising the Option to
make any representation or warranty to the Company as may be required by any
applicable law or regulation.

(b) Payment Upon Exercise of Option. Payment of the full Option
Price for shares upon which the Option is exercised shall accompany the
written notice of exercise described above. The Company shall cause to be
issued and delivered to the Optionee the certificate(s) representing such
shares as soon as practicable following the receipt of the notice and payment
described above.

(c) Limitation on Exercise of Option. Notwithstanding any other
provision of this Agreement to the contrary, the aggregate fair market value
(determined as of the Grant Date) of the Common Stock of the Company with
respect to which the Option is exercisable for the first time during any
calendar year, under all such incentive stock option plans (as defined in Code
Section 422A) of the Company and any parent or subsidiary corporations shall
not exceed One Hundred Thousand Dollars ($100,000.00).
(d) No Obligation to Exercise Option. This grant of options
shall impose no obligation upon the Optionee to exercise any such Options.

4. Nontransferability of Option. The Option shall not be
transferable or assignable by the Optionee. The Option shall be exercisable,
during the Optionee's lifetime, only by him or her. The Option shall not be
pledged or hypothecated in any way, and shall not be subject to execution,
attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any process upon the Option, shall be null, void and
without effect.

5. Termination of Employment. In the event Optionee shall cease to
be employed by the Company, all options granted to the Optionee under this
Agreement shall terminate immediately as to the unexercised portion thereof.
In the event of the death of an Optionee while in employ of the Company, the
Optionee's personal representative shall have the right subject to Section 3
of this Agreement and the Plan, to exercise any and all Options which could
have been exercised on the date of death, at any time within twelve months
from the date of death.

6. Effect of Amendment, Suspension or Termination of Existing
Options. No amendment, suspension or termination of the Plan shall, without
the Optionee's consent, alter or impair any of the rights or obligations of
the Company or the Optionee with respect to the Option granted under the terms
of this Agreement.

7. Restrictions on Issuing Shares. The Company's shares shall not
be issued pursuant to the exercise of the Option unless the transferability of
the shares so issued and/or the actual issuance of the shares comply with all
relevant provisions of law, including but not limited to, the (i) limitations,
if any, imposed by the Sate of Indiana, (ii) restrictions, if any, imposed by
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the United States
Securities and Exchange Commission thereunder, and (iii) requirements of any
stock exchange upon which the shares may then be listed. The Board of
Directors, shall, in its sole discretion, determine if such restrictions or
such issuance of shares so complies with all relevant provisions of law.

(a) Withholding of Taxes. Shares shall not be issued upon
exercise of the Option unless and until withholding tax, if any, or other
withholding liabilities, if any, imposed by any governmental entity have, in
the opinion of the Board of Directors, been satisfied or provision for their
satisfaction has been made.

(b) Other Restrictions. The Board of Directors may at the time
shares are actually issued pursuant to the exercise of the Option, place such
further restrictions on the transferability of any shares of Common Stock to
be issued to the Optionee upon the exercise of the Option as the Board, in its
sole discretion, determines to be reasonable, appropriate or necessary.

(c) No Rights Vested as a Shareholder. The Optionee and/or his
successor in interest shall not have any of the rights of a shareholder of the
Company by reason of the grant of the Option until such Option is exercised
and optioned shares are issued pursuant to such Option.

8. Adjustments. In the event of any Company recapitalization,
dissolution, liquidation or reorganization, the adjustments described under
the terms of the Plan shall be applied.

9. Acknowledgment. The Optionee acknowledges receipt of a copy of
the Plan, a copy of which is attached hereto, and represents that Optionee is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all the terms and provisions thereof. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of
the Board upon any questions arising under the Plan.

IN WITNESS WHEREOF, the Company, by its authorized representative, and
the Optionee have entered into this Agreement on the date first written above.

CROSSMANN COMMUNITIES, INC.: OPTIONEE:

By: /s/ Richard H. Crosser By: /s/ John M. Moody
Richard H. Crosser, President John M. Moody, Optionee

Exhibit 10.44

CROSSMANN COMMUNITIES, INC.

EMPLOYEE STOCK OPTION AGREEMENT

THIS AGREEMENT made this thirteenth day of March, by and between
Crossmann Communities, Inc., an Indiana corporation (the "Company") and Ronald
W. Rooze (the "Optionee"), pursuant to the terms, conditions and limitations
contained in the Employee Stock Option Plan, attached hereto and made a part
hereof and as it may be amended from time to time hereafter (the "Plan");

NOW, THEREFORE, the Company and the Optionee do hereby agree as follows:

(a) Method of Exercise. The Option shall be exercised by
written notice, which shall:

(ii) contain such representations and agreements, if any,
as may be required by the Company's counsel relative to the holder's
investment intent regarding such shares;

(iii) be signed by the Optionee; and

(iv) be in writing and delivered in person or by certified
mail to the Chairman of the Board of the Company.

(d) No Obligation to Exercise Option. This grant of options
shall impose no obligation upon the Optionee to exercise any such Options.
4. Nontransferability of Option. The Option shall not be
transferable or assignable by the Optionee. The Option shall be exercisable,
during the Optionee's lifetime, only by him or her. The Option shall not be
pledged or hypothecated in any way, and shall not be subject to execution,
attachment or similar process. Any attempted transfer, assignment, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any process upon the Option, shall be null, void and
without effect.

(b) Other Restrictions. The Board of Directors may at the time
shares are actually issued pursuant to the exercise of the Option, place
such further restrictions on the transferability of any shares of Common Stock
to be issued to the Optionee upon the exercise of the Option as the Board, in
its sole discretion, determines to be reasonable, appropriate or necessary.

8. Adjustments. In the event of any Company recapitalization,
dissolution, liquidation or reorganization, the adjustments described under
the terms of the Plan shall be applied.

IN WITNESS WHEREOF, the Company, by its authorized representative, and
the Optionee have entered into this Agreement on the date first written above.

CROSSMANN COMMUNITIES, INC.: OPTIONEE:

By: /s/Richard H. Crosser By: /s/Ronald W. Rooze
Richard H. Crosser, President Ronald W. Rooze, Optionee

Exhibit 10.45

CROSSMANN COMMUNITIES, INC.

OUTSIDE DIRECTOR STOCK OPTION AGREEMENT

THIS AGREEMENT made this thirteenth day of March, by and between
Crossmann Communities, Inc., an Indiana corporation (the "Company") and Larry
S. Wechter (the "Optionee"), pursuant to the terms, conditions and limitations
contained in the Outside Director Stock Option Plan, attached hereto and made
a part hereof and as it may be amended from time to time hereafter (the
"Plan");

NOW, THEREFORE, the Company and the Optionee do hereby agree as follows:

1. Grant of Option. The Company hereby grants to the Optionee the
right and option to purchase, pursuant to the terms and conditions contained
herein and in the Plan, all or any part of an aggregate of 1,000 shares of the
Common Stock of the Company (the "Option").

(a) Method of Exercise. The Option shall be exercised by
written notice, which shall:

(i) state the election to exercise the Option, the number
of shares in respect of which it is being exercised, the person(s) in whose
name(s) the stock certificate(s) for such shares is (are) to be registered,
including pertinent address(es) and Social Security Number(s);

(ii) contain such representations and agreements, if any,
as may be required by the Company's counsel relative to the holder's
investment intent regarding such shares;

(iii) be signed by the Optionee; and

(iv) be in writing and delivered in person or by certified
mail to the Chairman of the Board of the Company.

(d) No Obligation to Exercise Option. This grant of options
shall impose no obligation upon the Optionee to exercise any such Options.

7. Restrictions on Issuing Shares. The Company's shares shall not
be issued pursuant to the exercise of the Option unless the transferability of
the shares so issued and/or the actual issuance of the shares comply with all
relevant provisions of law, including but not limited to, the (i) limitations,
if any, imposed by the Sate of Indiana, (ii) restrictions, if any, imposed by
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the United States
Securities and Exchange Commission thereunder, and (iii) requirements of any
stock exchange upon which the shares may then be listed. The Inside
Directors, shall, in its sole discretion, determine if such restrictions or
such issuance of shares so complies with all relevant provisions of law.

(a) Withholding of Taxes. Shares shall not be issued upon
exercise of the Option unless and until withholding tax, if any, or other
withholding liabilities, if any, imposed by any governmental entity have, in
the opinion of the Inside Directors, been satisfied or provision for their
satisfaction has been made.

(b) Other Restrictions. The Inside Directors may at the time
shares are actually issued pursuant to the exercise of the Option, place
such further restrictions on the transferability of any shares of Common Stock
to be issued to the Optionee upon the exercise of the Option as the Board, in
its sole discretion, determines to be reasonable, appropriate or necessary.

(c) No Rights Vested as a Shareholder. The Optionee and/or his
successor in interest shall not have any of the rights of a shareholder of
the Company by reason of the grant of the Option until such Option is
exercised and optioned shares are issued pursuant to such Option.

8. Adjustments. In the event of any Company recapitalization,
dissolution, liquidation or reorganization, the adjustments described under
the terms of the Plan shall be applied.

IN WITNESS WHEREOF, the Company, by its authorized representative, and
the Optionee have entered into this Agreement on the date first written above.

CROSSMANN COMMUNITIES, INC.: OPTIONEE:

By: /s/Richard H. Crosser By: /s/Larry S. Wechter
Richard H. Crosser, President Larry S. Wechter, Optionee

Exhibit 10.46

CROSSMANN COMMUNITIES, INC.

OUTSIDE DIRECTOR STOCK OPTION AGREEMENT

THIS AGREEMENT made this thirteenth day of March, by and between
Crossmann Communities, Inc., an Indiana corporation (the "Company") and James
C. Shook (the "Optionee"), pursuant to the terms, conditions and limitations
contained in the Outside Director Stock Option Plan, attached hereto and made
a part hereof and as it may be amended from time to time hereafter (the
"Plan");

NOW, THEREFORE, the Company and the Optionee do hereby agree as follows:

1. Grant of Option. The Company hereby grants to the Optionee the
right and option to purchase, pursuant to the terms and conditions contained
herein and in the Plan, all or any part of an aggregate of 1,000 shares of the
Common Stock of the Company (the "Option").

(a) Method of Exercise. The Option shall be exercised by
written notice, which shall:

(i) state the election to exercise the Option, the number
of shares in respect of which it is being exercised, the person(s) in whose
name(s) the stock certificate(s) for such shares is (are) to be registered,
including pertinent address(es) and Social Security Number(s);

(ii) contain such representations and agreements, if any,
as may be required by the Company's counsel relative to the holder's
investment intent regarding such shares;

(iii) be signed by the Optionee; and

(iv) be in writing and delivered in person or by certified
mail to the Chairman of the Board of the Company.

(b) Payment Upon Exercise of Option. Payment of the full Option
Pricefor shares upon which the Option is exercised shall accompany the written
notice of exercise described above. The Company shall cause to be issued and
delivered to the Optionee the certificate(s) representing such shares as soon
as practicable following the receipt of the notice and payment described
above.

(d) No Obligation to Exercise Option. This grant of options
shall impose no obligation upon the Optionee to exercise any such Options.

7. Restrictions on Issuing Shares. The Company's shares shall not
be issued pursuant to the exercise of the Option unless the transferability of
the shares so issued and/or the actual issuance of the shares comply with all
relevant provisions of law, including but not limited to, the (i) limitations,
if any, imposed by the Sate of Indiana, (ii) restrictions, if any, imposed by
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the United States
Securities and Exchange Commission thereunder, and (iii) requirements of any
stock exchange upon which the shares may then be listed. The Inside
Directors, shall, in its sole discretion, determine if such restrictions or
such issuance of shares so complies with all relevant provisions of law.

(a) Withholding of Taxes. Shares shall not be issued upon
exercise of theOption unless and until withholding tax, if any, or other
withholding liabilities, if any, imposed by any governmental entity have, in
the opinion of the Inside Directors, been satisfied or provision for their
satisfaction has been made.

(b) Other Restrictions. The Inside Directors may at the time
shares are actually issued pursuant to the exercise of the Option, place such
further restrictions on the transferability of any shares of Common Stock to
be issued to the Optionee upon the exercise of the Option as the Board, in its
sole discretion, determines to be reasonable, appropriate or necessary.

8. Adjustments. In the event of any Company recapitalization,
dissolution, liquidation or reorganization, the adjustments described under
the terms of the Plan shall be applied.

IN WITNESS WHEREOF, the Company, by its authorized representative, and
the Optionee have entered into this Agreement on the date first written above.

CROSSMANN COMMUNITIES, INC.: OPTIONEE:

By: /s/Richard H. Crosser By: /s/James C. Shook
Richard H. Crosser, President James C. Shook, Optionee

<TABLE>

Crossmann Communities, Inc.
Exhibit 11.1 - Computation of Per Share Net Income
For the Year Ended December 31, 1996

Year Ended December 31, 1996: Fully
Primary Diluted
---------- ----------
Weighted Average Number of Shares:
Average Common Shares Outstanding 6,099,995 6,099,995
at December 31 1996
Dilutive Effect of Common Stock Equivalents
at December 31, 1996 38,311 38,311
---------- ----------
Weighted Average Shares at December 31, 1996 6,138,306 6,138,306
========== ==========
Net Income 15,065,628 15,065,628
========== ==========
Net Income per Common Share 2.45 (1) 2.45 (1)
========== ==========

<FN>

(1) This calculation is submitted in accordance with Regulation S-K item 601(b) (11)
although not required by footnote 2 to paragraph 14 of APB Opinion No. 15
because it results in dilution of less than 3%.
</TABLE>

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement Nos.
33-94568, 333-2626 and 333-4980 of Crossmann Communities, Inc. on Forms S-8 of
our report dated February 14, 1997, appearing in the Annual Report on Form
10-K of Crossmann Communities, Inc. for the year ended December 31, 1996.

DELOITTE & TOUCHE LLP

Indianapolis, Indiana
March 12, 1997

Exhibit 23.2

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-94568) pertaining to the Crossmann Communities, Inc. Employee
Stock Option Plan, the Registration Statement (Form S-8 No. 333-2626)
pertaining to the Crossmann Communities, Inc. Outside Director Stock Option
Plan, and the Registration Statement (Form S-8 No. 333-4980) pertaining to the
Crossmann Communities, Inc. 401(k) Profit Sharing Plan of our report dated
February 1, 1995, except for the 1995 Transaction portion of Note 5 to the
1994 financial statements as to which the date is March 28, 1995, with respect
to consolidated financial statements of Crossmann Communities, Inc. included
in its Annual Report on Form 10-K for the year ended December 31, 1996.

ERNST & YOUNG LLP

Indianapolis, Indiana
March 7, 1997

<ARTICLE> 5

<LEGEND>
Crossmann Communities, Inc.
Exhibit 27.3
Article 5 Financial Data Schedule for 1996 10-K
</LEGEND>
<CAPTION>

<S> <C>

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Dec-31-1996
<CASH> 100000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 113202107
<CURRENT-ASSETS> 0
<PP&E> 4564026
<DEPRECIATION> 1644693
<TOTAL-ASSETS> 128336469
<CURRENT-LIABILITIES> 0
<BONDS> 49326220
<COMMON> 24400903
0
0
<OTHER-SE> 35248456
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