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Inventory And Land Held For Sale
12 Months Ended
Dec. 31, 2017
Inventory Disclosure [Abstract]  
Inventory and land held for sale
Inventory and land held for sale

Major components of inventory at December 31, 2017 and 2016 were ($000’s omitted):
 
2017
 
2016
Homes under construction
$
2,421,405

 
$
1,921,259

Land under development
4,135,814

 
4,072,109

Raw land
589,911

 
777,287

 
$
7,147,130

 
$
6,770,655



In all periods presented, we capitalized all Homebuilding interest costs into inventory because the level of our active inventory exceeded our debt levels. Activity related to interest capitalized into inventory is as follows ($000’s omitted):
 
Years Ended December 31,
 
2017
 
2016
 
2015
Interest in inventory, beginning of period
$
186,097

 
$
149,498

 
$
167,638

Interest capitalized
181,719

 
160,506

 
120,001

Interest expensed
(141,205
)
 
(123,907
)
 
(138,141
)
Interest in inventory, end of period
$
226,611

 
$
186,097

 
$
149,498



Land-related charges

We recorded the following land-related charges ($000's omitted):
 
Statement of Operations Classification
 
2017
 
2016
 
2015
Land impairments
Home sale cost of revenues
 
$
88,952

 
$
1,074

 
$
7,347

Net realizable value adjustments ("NRV") - land held for sale
Land sale cost of revenues
 
83,576

 
1,105

 
(901
)
Impairments of unconsolidated entities
Other expense, net
 
8,017

 

 

Write-offs of deposits and pre-acquisition costs
Other expense, net
 
11,367

 
17,157

 
5,021

Total land-related charges
 
 
$
191,912

 
$
19,336

 
$
11,467



The 2017 charges were primarily the result of a plan we announced in May 2017 to sell select non-core and underutilized land parcels following a strategic review of our land portfolio. These land parcels were located in diverse geographic areas and no longer fit into our strategic plans. The land parcels identified for sale included: land requiring significant additional development spend that would not yield suitable returns; land in excess of near-term need; and land entitled for certain product types inconsistent with our primary offerings. In addition to this strategic review, we recorded impairment charges related to certain communities due to operating performance that was significantly lower than expectations.

The estimated fair values of these land parcels were based on sales contracts or letters of intent, comparisons to market comparable transactions, estimated future net cash flows discounted for inherent risk associated with each underlying asset, or similar information. The estimated cash flows for certain parcels incorporate estimates related to expected average selling prices, expected sales paces, expected land development and construction timelines, and anticipated land development, construction, and overhead costs. The assumptions used in the valuations are specific to each community tested for impairment and typically do not assume improvements in market conditions in the near term. In certain instances, the determination of fair value requires discounting the estimated cash flows at a rate commensurate with the inherent risks associated with each of the assets and related estimated cash flow streams. The discount rate used in determining each community's fair value depends on the stage of development of the community and other specific factors that increase or decrease the inherent risks associated with the community's cash flow streams and ranged from 12% to 25%.

Our evaluations for impairments are based on our best estimates of the future cash flows for our communities. Due to uncertainties in the estimation process, the significant volatility in demand for new housing, the long life cycles of certain of these communities, and potential changes in our strategy related to certain communities, actual results could differ significantly from such estimates.

Land held for sale

Land held for sale at December 31, 2017 and 2016 was as follows ($000’s omitted):
 
 
2017
 
2016
Land held for sale, gross
$
142,070

 
$
38,157

Net realizable value reserves
(73,686
)
 
(6,429
)
Land held for sale, net
$
68,384

 
$
31,728