the 6s was the last generation of phone where you could use an apple button from one phone in another, but you would lose Touch ID capability. with the 7 (and going forward) the only apple button that will work in a phone is the one that came with it from the factory. unless you go to apple and pay through the nose for an official home button replacement, your only option is to get a good quality (JC type) 3rd party home button from a source like injured gadgets or ifixit. it will give you home button functionality, but no Touch ID.
or you could just put the original home button into the new screen, if that's an option
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So your original home button was damaged? If not then swap it back over to the phone and it should work properly.