7.	Capitalization of Interest

The Company capitalizes interest on its senior notes associated with its qualified assets, which includes land and land under development that is actively being developed, homes under construction through the completion of construction. When construction of an unsold home is complete, such home is no longer considered to be a qualified asset and interest is no longer capitalized on that home. The Company expensed no interest for the three and six months ended June 30, 2012 and expensed $7.4 million and $16.1 million of interest primarily associated with interest incurred on its homebuilding debt during the three and six months ended June 30, 2011, respectively. The table set forth below summarizes homebuilding interest activity.


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(Dollars in thousands)
Interest incurred	$	10,573		$	18,144		$	21,136		$	36,393

Interest capitalized, beginning of period	$	63,633		$	43,762		$	58,742		$	38,446
Interest capitalized during period		10,573			10,750			20,358			20,269
Less: previously capitalized interest included in home cost of sales		(7,105	)		(5,454	)		(11,999	)		(9,657	)

Interest capitalized, end of period	$	67,101		$	49,058		$	67,101		$	49,058