Inventories

Inventories consisted of the following (in thousands):



	November 30,
	2016		2015
Homes under construction	$	1,245,938	$	1,031,356
Land under development	1,727,657		1,766,045
Land held for future development or sale (a)	429,633		516,346
Total	$	3,403,228	$	3,313,747


(a)	Land held for sale totaled $63.4 million at November 30, 2016 and $5.7 million at November 30, 2015.

Homes under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs. Land development costs also include capitalized interest and real estate taxes. When home construction begins, the associated land acquisition and land development costs are included in homes under construction. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has been suspended or has not yet begun but is expected to occur in the future. These assets held for future development are located in various submarkets where conditions do not presently support further investment or development, or are subject to a building permit moratorium or regulatory restrictions, or are portions of larger land parcels that we plan to build out over several years and/or that have not yet been entitled. We may also suspend development activity if we believe it will result in greater returns and/or maximize the economic performance of a particular community by delaying improvements for a period of time to, for instance, allow earlier phases of a long-term, multi-phase community or a neighboring community to generate or extend sales momentum or for market conditions to improve. In some instances, we may activate or resume development activity for such inventory to accelerate sales and/or our return on investment. We have activated assets previously held for future development in certain markets as part of our strategic growth initiatives in 2016 and 2015. Land is generally considered held for sale when management commits to a plan to sell the land; the land is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; the sale of the land is expected to be completed within one year; the land is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. Interest and real estate taxes are not capitalized on land held for future development or sale.

In the 2016 fourth quarter, we changed our strategy related to certain land parcels that were either held for future development or under development and decided to monetize these assets through land sales, rather than build and sell homes on these parcels as previously intended. These parcels, which were classified as land held for sale at November 30, 2016, included land in excess of our near-term requirements; land where we now believe the necessary incremental investment in development is not justified; land located in areas outside of our served markets; and/or land entitled for certain product types that are not aligned with our primary product offerings. The majority of these land parcels are located in our Southeast homebuilding reporting segment. As discussed in Note 7 – Inventory Impairments and Land Option Contract Abandonments, we recognized inventory impairment charges to reduce the carrying values of these land parcels to their estimated fair values, less associated costs to sell.

Our interest costs were as follows (in thousands):



	Years Ended November 30,
	2016			2015			2014
Capitalized interest at beginning of year	$	288,442		$	266,668		$	216,681
Interest incurred	185,466			186,885			171,541
Interest expensed	(5,900		)	(21,856		)	(30,750		)
Interest amortized to construction and land costs (a)	(161,285		)	(143,255		)	(90,804		)
Capitalized interest at end of year (b)	$	306,723		$	288,442		$	266,668


(a)	Interest amortized to construction and land costs for the years ended November 30, 2016 and 2015 included $.7 million and $16.4 million, respectively, related to land sales during the periods.


(b)	Capitalized interest amounts presented in the table reflect the gross amount of capitalized interest, as inventory impairment charges recognized, if any, are not generally allocated to specific components of inventory.