4. Real Estate Inventories

Real estate inventories are summarized as follows:



	December 31,
	2018		2017
	(Dollars in thousands)
Deposits and pre-acquisition costs	$	20,726	$	35,846
Land held and land under development	115,987		47,757
Homes completed or under construction	380,956		302,884
Model homes	48,621		29,656
	$	566,290	$	416,143

All of our deposits and pre-acquisition costs are nonrefundable, except for refundable deposits of $0.9 million and $0.8 million as of December 31, 2018 and 2017, respectively.

Land held and land under development includes land costs and costs incurred during site development such as development, indirects, and permits. Homes completed or under construction and model homes include all costs associated with home construction, including land, development, indirects, permits, materials and labor (except for capitalized selling and marketing costs, which are classified in other assets).

In accordance with ASC 360, inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. We review each real estate asset at the community-level on a quarterly basis or whenever indicators of impairment exist. For the years ended December 31, 2018, 2017 and 2016, the Company recognized real estate-related impairments of $10.0 million, $2.2 million and $3.5 million, respectively, in cost of sales resulting in a decrease of the same amount to pretax income for our homebuilding segment. Fair value for the homebuilding projects impaired during 2018 and 2017 was calculated under discounted cash flow models. Project cash flows were discounted at rates ranging from 9%-16% for 2018 and 8% for 2017. Fair value for the homebuilding projects impaired during 2016 was calculated under discounted cash flow models with project cash flows discounted at rates ranging from 10%-14%. Fair value for the land sales project impaired during 2016 was determined using the land purchase price included in the executed sales agreement, less the Company's cost to sell. The following table summarizes inventory impairments recorded during the years ended December 31, 2018, 2017 and 2016:



	Year Ended December 31,
	2018		2017		2016
	(Dollars in Thousands)
Inventory impairments:
Home sales	$	10,000	$	2,200	$	2,350
Land sales	—		—		1,150
Total inventory impairments	$	10,000	$	2,200	$	3,500

Remaining carrying value of inventory impaired at year end	$	57,845	$	5,921	$	30,225
Number of projects impaired during the year	2		1		3
Total number of projects subject to periodic impairment review during the year ⁽¹⁾	26		26		27


(1)	Represents the peak number of real estate projects that we had during each respective year. The number of projects outstanding at the end of each year may be less than the number of projects listed herein.

The home sales impairments of $10.0 million recorded during 2018 related to homes completed or under construction for two, higher-priced active homebuilding communities located in Southern California. These communities were experiencing slower monthly sales absorption rates, and the Company determined additional incentives and pricing adjustments were required to sell the remaining homes and lots at lower estimated aggregate sales prices than the previous carrying value for each project.

The home sales impairments of $2.2 million recorded during 2017 related to homes completed or under construction for one active homebuilding community located in Southern California that closed out during 2018. This community was experiencing a slow monthly sales absorption rate, and the Company determined that additional incentives were required to sell the remaining homes and lots at estimated aggregate sales prices that would be lower than its previous carrying value.

The home sales impairments of $2.4 million recorded during 2016 related to land under development and homes completed or under construction for two active homebuilding communities. These communities were experiencing slow monthly sales absorption rates, and the Company determined that additional incentives were required to sell the remaining homes and lots at estimated aggregate sales prices that would be lower than its previous carrying values. One community is located in Southern California and the other is located in Northern California and both communities closed out during 2018. The land sales impairments of $1.2 million related to land under development in Northern California that the Company intended to sell after certain improvements were complete. Subsequently, the land sale was not ultimately consummated and the Company made the determination during 2017 to develop and build homes on this land. At December 31, 2018, the Company had delivered approximately 85% of the homes built in this community.