Real Estate Inventories

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



	March 31, 2019		December 31, 2018
Real estate inventories owned:
Homes completed or under construction	$	1,037,271	$	959,911
Land under development	1,668,075		1,743,537
Land held for future development	203,476		201,874
Model homes	258,545		238,828
Total real estate inventories owned	3,167,367		3,144,150
Real estate inventories not owned:
Land purchase and land option deposits	75,311		71,909
Total real estate inventories not owned	75,311		71,909
Total real estate inventories	$	3,242,678	$	3,216,059

Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future.

Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements as well as consolidated inventory held by variable interest entities. For further details, see Note 7, Variable Interest Entities.

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



	Three Months Ended March 31,
	2019			2018
Interest incurred	$	23,373		$	21,520
Interest capitalized	(23,373		)	(21,520		)
Interest expensed	$	—		$	—
Capitalized interest in beginning inventory	$	184,400		$	176,348
Interest capitalized as a cost of inventory	23,373			21,520
Interest previously capitalized as a cost of inventory, included in cost of sales	(14,333		)	(14,242		)
Capitalized interest in ending inventory	$	193,440		$	183,626

Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered. Interest that is expensed as incurred is included in other (expense) income, net.

Real Estate Inventory Impairments and Land Option Abandonments

Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):



	Three Months Ended March 31,
	2019		2018
Real estate inventory impairments	$	—	$	—
Land and lot option abandonments and pre-acquisition charges	5,202		248
Total	$	5,202	$	248

Impairments of real estate inventory relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges. No real estate inventory impairments were recorded for the three-month periods ended March 31, 2019 or 2018, respectively.

In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time.

Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.