Inventory

9 Months Ended

Jul. 31, 2020

Inventory at July 31, 2020 and October 31, 2019 consisted of the following (amounts in thousands):


	July 31, 2020		October 31, 2019
Land controlled for future communities	$	167,694	$	182,929
Land owned for future communities	963,399		868,202
Operating communities	6,903,422		6,821,917
	$	8,034,515	$	7,873,048

Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes; communities that were previously offering homes for sale but are temporarily closed due to business conditions or non-availability of improved home sites and that are expected to reopen within 12 months of the end of the fiscal period being reported on; and communities preparing to open for sale. The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.

Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on have been classified as land owned for future communities.

Information regarding the classification, number, and carrying value of these temporarily closed communities, as of the dates indicated, is provided in the table below:


	July 31, 2020		October 31, 2019
Land owned for future communities:
Number of communities	15		16
Carrying value (in thousands)	$	112,133	$	120,857
Operating communities:
Number of communities	1		1
Carrying value (in thousands)	$	5,840	$	2,871

The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, for the periods indicated, are shown in the table below (amounts in thousands):


	Nine months ended July 31,						Three months ended July 31,
	2020		2019		2020		2019
Land controlled for future communities	$	16,765	$	7,256	$	3,926	$	3,579
Land owned for future communities	4,869				2,764
Operating communities	300		24,380				1,100
	$	21,934	$	31,636	$	6,690	$	4,679

See Note 12, “Fair Value Disclosures,” for information regarding the number of operating communities that we tested for potential impairment, the number of operating communities in which we recognized impairment charges, the amount of impairment charges recognized, and the fair values of those communities, net of impairment charges.

See Note 14, “Commitments and Contingencies,” for information regarding land purchase commitments.

At July 31, 2020, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEs and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our risk is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At July 31, 2020, we determined that 191 land purchase contracts, with an aggregate purchase price of $2.17 billion, on which we had made aggregate deposits totaling $164.2 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2019, we determined that 127 land purchase contracts, with an aggregate purchase price of $2.00 billion, on which we had made aggregate deposits totaling $149.2 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts.

Interest incurred, capitalized, and expensed, for the periods indicated, was as follows (amounts in thousands):


	Nine months ended July 31,						Three months ended July 31,
	2020		2019		2020		2019
Interest capitalized, beginning of period	$	311,323	$	319,364	$	324,864	$	328,583
Interest incurred	131,547		131,830		41,794		43,968
Interest expensed to home sales cost of revenues	(111,278)		(125,862)		(40,467)		(46,635)
Interest expensed to land sales cost of revenues	(4,124)		(945)		(2,820)		(310)
Interest expensed in other income	(2,440)

Interest capitalized on investments in unconsolidated entities	(2,790)		(3,936)		(1,013)		(852)

Previously capitalized interest on investments in unconsolidated entities transferred to inventory	208		4,802		88		499
Interest capitalized, end of period	$	322,446	$	325,253	$	322,446	$	325,253