7.	Capitalization of Interest

We capitalize interest on our senior notes associated with our qualified assets, which includes land and land under development that is actively being developed and 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. We expensed $0.8 million, $20.8 million and $38.2 million of interest for the years ended December 31, 2012, 2011 and 2010, respectively, primarily associated with interest incurred on our homebuilding debt during the same periods. The table set forth below summarizes homebuilding interest activity.


	Year Ended December 31,
	2012			2011			2010
	(Dollars in thousands)
Homebuilding interest incurred	$	42,315		$	62,290		$	72,076
Less: Interest capitalized		(41,507	)		(41,448	)		(33,919	)

Homebuilding interest expense	$	808		$	20,842		$	38,157

Interest capitalized, beginning of period	$	58,742		$	38,446		$	28,339
Interest capitalized during period		41,507			41,448			33,919
Less: Previously capitalized interest included in home cost of sales		(31,106	)		(21,152	)		(23,812	)

Interest capitalized, end of period	$	69,143		$	58,742		$	38,446