| REAL ESTATE AND CAPITALIZED INTEREST |
REAL ESTATE AND CAPITALIZED INTEREST Real estate consists of the following (in thousands):
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As of |
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September 30, 2019 |
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December 31, 2018 |
Homes under contract under construction (1)
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$ |
712,288 |
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$ |
480,143 |
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Unsold homes, completed and under construction (1)
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661,393 |
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644,717 |
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Model homes (1)
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126,925 |
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146,327 |
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Finished home sites and home sites under development (2)
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1,353,327 |
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1,471,434 |
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Total |
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$ |
2,853,933 |
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$ |
2,742,621 |
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(1) |
Includes the allocated land and land development costs associated with each lot for these homes. |
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(2) |
Includes raw land, land held for development and land held for sale, less impairments, if any. Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred. |
Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred in connection with our real estate development and construction activities. Capitalized interest is allocated to active real estate when incurred and charged to cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands):
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2019 |
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2018 |
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2019 |
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2018 |
Capitalized interest, beginning of period |
$ |
88,307 |
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$ |
84,443 |
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$ |
88,454 |
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$ |
78,564 |
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Interest incurred |
21,319 |
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21,545 |
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64,227 |
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63,788 |
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Interest expensed |
(1,068 |
) |
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(53 |
) |
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(8,350 |
) |
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(233 |
) |
Interest amortized to cost of home and land closings |
(20,363 |
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(17,871 |
) |
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(56,136 |
) |
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(54,055 |
) |
Capitalized interest, end of period |
$ |
88,195 |
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$ |
88,064 |
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$ |
88,195 |
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$ |
88,064 |
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