Capitalized Interest

9 Months Ended

Jun. 30, 2024

The Company capitalizes interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. During periods in which the Company’s active inventory is lower than its debt level, a portion of the interest incurred is reflected as interest expense in the period incurred. During the first nine months of fiscal 2024 and fiscal 2023, the Company’s active inventory exceeded its debt level, and all interest incurred was capitalized to inventory.

The following table summarizes the Company’s interest costs incurred, capitalized and expensed during the three and nine months ended June 30, 2024 and 2023:


	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
	(In millions)
Capitalized interest, beginning of period	$	318.7	$	271.7	$	286.4	$	237.4
Interest incurred (1)	54.5		57.4		147.6		154.2
Interest charged to cost of sales	(35.3)		(41.3)		(96.1)		(103.8)
Capitalized interest, end of period	$	337.9	$	287.8	$	337.9	$	287.8

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(1) Interest incurred includes (a) interest on the Company’s mortgage repurchase facilities of $16.0 million and $44.3 million in the three and nine months ended June 30, 2024, respectively, and $12.7 million and $30.5 million in the prior year periods; (b) Forestar interest of $8.2 million and $24.5 million in the three and nine months ended June 30, 2024, respectively, and $8.2 million and $24.6 million in the prior year periods; and (c) interest on the rental revolving credit facility of $18.8 million and $44.6 million in the three and nine months ended June 30, 2024, respectively, and $19.3 million and $42.0 million in the prior year periods.