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 to our financial statements 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 March 31, 2019 and December 31, 2018 is as follows:



(In thousands)	March 31, 2019		December 31, 2018
Single-family lots, land and land development costs	$	807,324	$	778,943
Land held for sale	8,732		12,633
Homes under construction	760,756		730,390
Model homes and furnishings - at cost (less accumulated depreciation: March 31, 2019 - $13,568; December 31, 2018 - $13,441)	92,942		87,132
Community development district infrastructure	11,728		12,392
Land purchase deposits	33,386		33,662
Consolidated inventory not owned	15,920		19,308
Total inventory	$	1,730,788	$	1,674,460

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 March 31, 2019 and December 31, 2018, we had 1,278 homes (with a carrying value of $270.0 million) and 1,443 homes (with a carrying value of $311.0 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, which is typically three years.

We own lots in certain communities in Florida that have Community Development Districts (“CDDs”). The Company records a liability for the estimated developer obligations that are probable and estimable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user. The Company reduces this liability at the time of closing and the transfer of the property. The Company recorded a $11.7 million and $12.4 million liability related to these CDD bond obligations as of March 31, 2019 and December 31, 2018, respectively, along with the related inventory infrastructure.

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 months ended March 31, 2019 and 2018 is as follows:



	Three Months Ended March 31,
(In thousands)	2019			2018
Capitalized interest, beginning of period	$	20,765		$	17,169
Interest capitalized to inventory	6,134			5,959
Capitalized interest charged to land and housing costs and expenses	(5,393		)	(4,864		)
Capitalized interest, end of period	$	21,506		$	18,264

Interest incurred	$	12,926		$	11,837