Annual report [Section 13 and 15(d), not S-K Item 405]

REAL ESTATE AND CAPITALIZED INTEREST

v3.25.4
REAL ESTATE AND CAPITALIZED INTEREST
 12 Months Ended
Dec. 31, 2025
Inventory Disclosure [Abstract]  
REAL ESTATE AND CAPITALIZED INTEREST REAL ESTATE AND CAPITALIZED INTEREST
Real estate consists of the following (in thousands):
 
At December 31,
2025 2024
Homes completed and under construction (1) $ 2,069,548  $ 2,375,639 
Finished home sites and home sites under development (2) 3,917,572  3,353,136 
Total $ 5,987,120  $ 5,728,775 
 
(1)Includes the allocated land and land development costs associated with each lot for sold and unsold homes.
(2)Includes raw land, land held for development, land held for sale and communities in mothball status, less impairments, if any. Land held for development, land held for sale and communities in mothball status totaled $164.4 million and $62.7 million as of December 31, 2025 and 2024, respectively. We do not capitalize interest for these 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 to applicable qualifying assets 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):
 
  Years Ended December 31,
  2025 2024 2023
Capitalized interest, beginning of year $ 53,678  $ 54,516  $ 60,169 
Interest incurred 74,750  52,717  57,759 
Interest expensed —  —  — 
Interest amortized to cost of home and land closings (51,364) (53,555) (63,412)
Capitalized interest, end of year (1) $ 77,064  $ 53,678  $ 54,516 
 
(1)Approximately $40,000, $192,000 and $346,000 of the capitalized interest is related to our joint venture investments and is a component of Investments in unconsolidated entities in our consolidated balance sheets as of December 31, 2025, 2024 and 2023, respectively.

As discussed in Note 1, and in accordance with ASC 360-10, all of our land inventory and related real estate assets are periodically reviewed for recoverability when certain criteria are met, but at least annually, as our inventory is considered “long-lived” in accordance with GAAP. Based on these reviews, we recorded the following impairment charges during the years ended December 31, 2025, 2024 and 2023 (in thousands):
Years Ended December 31,
  2025 2024 2023
Real estate inventory impairments:
West $ 742  $ —  $ 964 
Central 5,697  —  — 
East $ 10,093  $ —  $ — 
Total $ 16,532  $ —  $ 964 
Impairments of land held for sale:
West —  $ —  $ — 
Central 1,442  —  — 
East 144  $ —  $ — 
Total $ 1,586  $ —  $ — 
Total impairments:
West 742  —  964 
Central 7,139  —  — 
East 10,237  —  — 
Total $ 18,118  $ —  $ 964 
As discussed in Note 1, non-refundable deposits are expensed to Cost of home closings when a land acquisition is terminated or no longer considered probable. The following tables summarizes the write-offs of non-refundable deposits and associated pre-acquisition costs for terminated land contracts during the periods presented (in thousands):
Years Ended December 31,
2025 2024 2023
Terminated option/purchase contracts and related pre-acquisition costs:
West $ 8,599  $ 2,478  $ 3,336 
Central 5,204  1,562  451 
East $ 25,579  2,662  1,522 
Total $ 39,382  $ 6,702  $ 5,309