Inventory (Tables)

6 Months Ended

Mar. 31, 2017

Mar. 31, 2016

The components of our owned inventory are as follows as of March 31, 2017 and September 30, 2016:



(In thousands)	March 31, 2017		September 30, 2016
Homes under construction	$	462,017	$	377,191
Development projects in progress	772,664		742,417
Land held for future development	152,724		213,006
Land held for sale	25,585		29,696
Capitalized interest	146,916		138,108
Model homes	71,166		68,861
Total owned inventory	$	1,631,072	$	1,569,279

Schedule of total owned inventory, by segment

Total owned inventory, by reportable segment, is presented by category in the table below as of March 31, 2017 and September 30, 2016:



(In thousands)	Projects in Progress ^(a)		Land Held for Future Development		Land Held for Sale		Total Owned Inventory
March 31, 2017
West Segment	$	647,239	$	128,132	$	8,144	$	783,515
East Segment	297,967		13,649		15,129		326,745
Southeast Segment	308,362		10,943		1,210		320,515
Corporate and unallocated ^(b)	199,195		—		1,102		200,297
Total	$	1,452,763	$	152,724	$	25,585	$	1,631,072
September 30, 2016
West Segment	$	586,420	$	172,015	$	6,577	$	765,012
East Segment	276,785		30,036		20,930		327,751
Southeast Segment	276,385		10,955		1,090		288,430
Corporate and unallocated ^(b)	186,987		—		1,099		188,086
Total	$	1,326,577	$	213,006	$	29,696	$	1,569,279

^(a)Projects in progress include homes under construction, development projects in progress, capitalized interest and model homes categories from the preceding table.

^(b)Projects in progress amount includes capitalized interest and indirect costs that are maintained within our Corporate and unallocated segment. Land held for sale amount includes parcels held by our discontinued operations.

Recoverability schedule of inventory assets held for development, by reportable segment

The table below summarizes the results of our impairment analysis by reportable segment for the period presented:



($ in thousands)		Undiscounted Cash Flow Analyses Prepared
Segment ^(a)	# of Communities on Watch List^(b)	# of Communities ^(c)	Pre-analysis Book Value (BV)		Aggregate Undiscounted Cash Flow as a % of BV ^(d)
Quarter Ended March 31, 2016
West	8	2	$	20,809	108.0	%
East	1	—	—		—	%
Corporate and unallocated ^(e)	—	—	1,105		N/A^(f)
Total	9	2	$	21,914

^(a) We have elected to aggregate our disclosure at the reportable segment level because we believe this level of disclosure is most meaningful to the readers of our financial statements.

^(b)Number of communities in this column excludes communities that are closing out and have less than ten closings remaining.

^(c)Number of communities in this column is lower than the number of communities on our watch list because it excludes communities due to certain qualitative considerations that would imply that the low profitability levels are temporary in nature.

^(d)An aggregate undiscounted cash flow as a percentage of book value under 100% would indicate a possible impairment and is consistent with our “watch list” methodology. While this metric for the communities in the West segment was above 100% for the quarter ended March 31, 2016 in total, for the community that we ultimately impaired, the metric was below 100%, while the metric for the community we did not impair was above 100%.

^(e) Amount represents capitalized interest and indirects balance related to the communities for which an undiscounted cash flow analysis was prepared. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.

^(f) N/A - not applicable.

Schedule of discounted cash flow analysis

The following table presents, by reportable segment, details around the impairment charges taken on projects in progress for the periods presented:



($ in thousands)	Three and Six Months Ended
Segment	# of Communities Impaired	# of Lots Impaired	Impairment Charge		Estimated Fair Value of Impaired Inventory at time of Impairment
March 31, 2016
West	1	34	$	1,513	$	5,518
Corporate and unallocated ^(a)	—	—	312		—
Total	1	34	$	1,825	$	5,518

^(a) Amount represents capitalized interest and indirects balance that was impaired. Capitalized interest and indirects are maintained within our Corporate and unallocated segment.

Quantitative unobservable inputs for inventory impairment

The following table presents the values of significant quantitative unobservable inputs we used in determining the fair value of the community we impaired during the periods presented:



	Three and Six Months Ended
Unobservable Inputs	March 31, 2016
Average selling price (in thousands)	$	409
Closings per community per month	2
Discount rate	15.33		%

Schedule of inventory impairments and lot option abandonment charges, by reportable homebuilding segment

The following table presents, by reportable segment, our total impairment and abandonment charges for the periods presented:



	Three Months Ended March 31,				Six Months Ended March 31,
(In thousands)	2017		2016		2017		2016
Projects in Progress:
West	$	—	$	1,513	$	—	$	1,513
Corporate and unallocated	—		312		—		312
Total impairment charges on projects in progress	$	—	$	1,825	$	—	$	1,825
Land Held for Sale:
West	$	94	$	—	$	94	$	—
East	—		—		—		197
Southeast	—		—		—		371
Total impairment charges on land held for sale	$	94	$	—	$	94	$	568
Abandonments:
East	$	188	$	—	$	188	$	—
Southeast	—		—		—		788
Total abandonments charges	$	188	$	—	$	188	$	788
Total impairment and abandonment charges	$	282	$	1,825	$	282	$	3,181

Summary of interests in lot option agreements

The following table provides a summary of our interests in lot option agreements as of March 31, 2017 and September 30, 2016:



(In thousands)	Deposits & Non-refundable Pre-acquisition Costs Incurred		Remaining Obligation
As of March 31, 2017
Unconsolidated lot option agreements	$	92,227	$	435,606
As of September 30, 2016
Unconsolidated lot option agreements	$	80,433	$	446,414