Inventory and Capitalized Interest

9 Months Ended

Sep. 30, 2015

Inventory and Capitalized Interest

Inventory

Inventory is recorded at cost, unless events and circumstances indicate that the carrying value of the land is impaired, at which point the inventory is written down to fair value (see Note 4 for additional details relating to our procedures for evaluating our inventories for impairment). Inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, direct overhead costs incurred during development and home construction, and common costs that benefit the entire community, less impairments, if any.

A summary of the Company’s inventory as of September 30, 2015 and December 31, 2014 is as follows:



(In thousands)	September 30, 2015		December 31, 2014
Single-family lots, land and land development costs	$	539,517	$	463,198
Land held for sale	5,803		10,647
Homes under construction	488,041		371,119
Model homes and furnishings - at cost (less accumulated depreciation: September 30, 2015 - $8,052; December 31, 2014 - $7,010)	65,482		46,780
Community development district infrastructure	1,159		2,571
Land purchase deposits	21,994		23,495
Consolidated inventory not owned	11,418		779
Total inventory	$	1,133,414	$	918,589

Single-family lots, land and land development costs include raw land that the Company has purchased to develop into lots, costs incurred to develop the raw land into lots, and lots for which development has been completed, but which have not yet been used to start construction of a home.

Homes under construction include homes that are in various stages of construction. As of September 30, 2015 and December 31, 2014, we had 962 homes (with a carrying value of $183.8 million) and 979 homes (with a carrying value of $186.7 million), respectively, included in homes under construction that were not subject to a sales contract.

Model homes and furnishings include homes that are under construction or have been completed and are being used as sales models. The amount also includes the net book value of furnishings included in our model homes. Depreciation on model home furnishings is recorded using an accelerated method over the estimated useful life of the assets, typically three years.

Land purchase deposits include both refundable and non-refundable amounts paid to third party sellers relating to the purchase of land. On an ongoing basis, the Company evaluates the land option agreements relating to the land purchase deposits. In the period during which the Company makes the decision not to proceed with the purchase of land under an agreement, the Company expenses any deposits and accumulated pre-acquisition costs relating to such agreement.

Capitalized Interest

The Company capitalizes interest during land development and home construction. Capitalized interest is charged to land and housing costs and expensed as the related inventory is delivered to a third party. The summary of capitalized interest for the three and nine months ended September 30, 2015 and 2014 is as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2015			2014			2015			2014
Capitalized interest, beginning of period	$	16,437		$	14,831		$	15,296		$	13,802
Interest capitalized to inventory	5,006			5,161			13,466			13,141
Capitalized interest charged to land and housing costs and expenses	(4,318		)	(4,281		)	(11,637		)	(11,232		)
Capitalized interest, end of period	$	17,125		$	15,711		$	17,125		$	15,711

Interest incurred	$	8,664		$	7,810		$	25,336		$	22,690