8. Warranties

Generally, we provide each homeowner with product warranties covering workmanship and materials for one year from the time of closing, and warranties covering structural systems for eight to 10 years from the time of closing. Estimated future direct warranty costs are accrued and charged to cost of home sales revenues in the period when the related home sales revenues are recognized. Amounts accrued, which are included in accrued expenses and other liabilities on our Consolidated Balance Sheets, are based upon historical experience rates. We subsequently assess the adequacy of our warranty accrual on a quarterly basis through an internal model that incorporates historical payment trends and adjust the amounts recorded if necessary. Based on favorable warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $0.6 million and $0.8 million during the three and nine months ended September 30, 2018, respectively, which is included as a reduction to cost of homes sales revenues on our Consolidated Statements of Operations.

The following table summarizes the changes in our warranty accrual (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Beginning balance	$	10,269	$	3,057	$	8,531	$	2,479
Warranty reserve assumed in business combination		—		6,202		397		6,202
Warranty expense provisions		1,568		1,245		4,789		2,827
Payments		(968)		(710)		(2,688)		(1,458)
Warranty adjustment		(597)		(944)		(757)		(1,200)
Ending balance	$	10,272	$	8,850	$	10,272	$	8,850