Note J - Warranty Costs

Warranty reserves for houses are established to cover estimated costs for materials and labor with regard to warranty-type claims to be incurred subsequent to the closing of a house. Reserves are determined based on historical data and other relevant factors. We periodically review our warranty reserves and adjust them when appropriate to reflect qualitative risks associated with the products and markets in which we build. We may have recourse against subcontractors for claims relating to workmanship and materials. Warranty reserves are included in Accrued and Other Liabilities in the consolidated balance sheets.

During the nine and three months ended September 30, 2012 and 2011 changes in the warranty reserve consisted of the following:

	Nine Months						Three Months
	2012			2011			2012			2011
Accrued warranty reserve, beginning of period	$	537		$	477		$	540		$	422
Estimated warranty expense		526			335			207			164
Amounts charged against warranty reserve		(458	)		(331	)		(142	)		(105	)
Accrued warranty reserve, end of period	$	605		$	481		$	605		$	481