Real Estate Inventories

6 Months Ended

Jun. 30, 2014

3. Real Estate Inventories

Real estate inventories consisted of the following (in thousands):


	June 30,		December 31,
	2014		2013
Inventories owned:
Deposits and pre-acquisition costs	$	21,889	$	19,714
Land under development		324,132		326,209
Homes completed or under construction		168,612		92,901
Model homes		27,404		16,818

	$	542,037	$	455,642

Model homes, homes completed, and homes under construction include all costs associated with home construction, including land, development, indirect costs, permits, and vertical construction. Land under development includes costs incurred during site development such as land, development, indirect costs, and permits. Land is classified as held for future development if no significant development has occurred.

Interest incurred, capitalized and expensed were as follows (in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
Interest incurred	$	2,068		$	579		$	3,304		$	1,313
Interest capitalized		(2,068	)		(579	)		(3,304	)		(1,313	)

Interest expensed	$	—		$	—		$	—		$	—

Capitalized interest in beginning inventory	$	3,078		$	1,842		$	2,264		$	1,364
Interest capitalized as a cost of inventory		2,068			579			3,304			1,313
Interest previously capitalized as a cost of inventory, included in cost of sales		(557	)		(502	)		(979	)		(758	)

Capitalized interest in ending inventory	$	4,589		$	1,919		$	4,589		$	1,919

Interest is capitalized to real estate inventory during development and other qualifying activities. Interest that is capitalized to real estate inventory is included in cost of sales as related units are closed.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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