Solved it. I recently had this issue on a iPhone 7 Plus. I replaced the screen just fine first time. I then noticed that the sensor that turns off the screen when making a call was not working.
Upon opening the phone a second time when I put it back together I got the message about home button may needing service. The phone was also extremely slow. The front facing camera was not working, nor the sensor. Many apps stopped working.
With my electron repair microscope I could spot a problem with the motherboard. I replaced the small chips and all was working well. It gave me a few hours of headake and rabbit holing.
This issue is mostly due to a defective screen, but can sometimes be motherboard.
I own and run a small repair shop in sweden.