Inventory

3 Months Ended

Jan. 31, 2024

Major components of inventory at January 31, 2024 and October 31, 2023 were (amounts in thousands):


	January 31, 2024		October 31, 2023
Land deposits and costs of future development	$	533,512	$	549,035
Land and land development costs	2,671,521		2,631,147
Land and land development costs associated with homes under construction	3,182,663		2,916,334
Total land and land development costs	6,387,696		6,096,516

Homes under construction	2,722,430		2,515,484
Model homes (1)	471,356		445,578
	$	9,581,482	$	9,057,578

(1) Includes the allocated land and land development costs associated with each of our model homes in operation.

The following table provides a summary of the composition of our inventory based on community status at January 31, 2024 and October 31, 2023 (amounts in thousands):


	January 31, 2024		October 31, 2023
Land controlled for future communities	$	167,697	$	173,175
Land owned for future communities	561,866		663,413
Operating communities	8,851,919		8,220,990
	$	9,581,482	$	9,057,578

Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes 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.

Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).

The amounts we have provided for inventory impairment charges and the expensing of costs that we believe not to be recoverable, and which are included in home sales cost of revenues, are shown in the table below (amounts in thousands):


	Three months ended January 31,
		2024		2023
Land controlled for future communities		$	1,471	$	2,604

Operating communities		—		5,400
		$	1,471	$	8,004

We have also recognized $13.0 million of impairment charges on land held for sale included in land sales and other cost of revenues during the three-month period ended January 31, 2023. No similar amounts were recognized in the three-month period ended January 31, 2024.

See Note 13, “Commitments and Contingencies,” for information regarding land purchase commitments.

At January 31, 2024, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were variable interest entities (“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 January 31, 2024, we determined that 263 land purchase contracts, with an aggregate purchase price of $4.17 billion, on which we had made aggregate deposits totaling $423.3 million, were VIEs, and that we were not the primary beneficiary of any VIE related to our land purchase contracts. At October 31, 2023, we determined that 251 land purchase contracts, with an aggregate purchase price of $3.79 billion, on which we had made aggregate deposits totaling $421.4 million, were VIEs and that we were not the primary beneficiary of any VIE related to our land purchase contracts. However, at January 31, 2024 and October 31, 2023, certain contracts were accrued as we concluded we were economically compelled to purchase the land.

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


	Three months ended January 31,
		2024		2023
Interest capitalized, beginning of period		$	190,550	$	209,468
Interest incurred		33,960		36,854
Interest expensed to home sales cost of revenues		(23,579)		(25,080)
Interest expensed to land sales and other cost of revenues		(294)		(3,477)


Interest capitalized on investments in unconsolidated entities		(2,489)		(2,463)
Previously capitalized interest transferred to investments in unconsolidated entities		—		(244)
Previously capitalized interest on investments in unconsolidated entities transferred to inventory		142		139
Interest capitalized, end of period		$	198,290	$	215,197