8.	Capitalization of Interest

We capitalize interest to inventories during the period of development in accordance with ASC Topic 835, Interest (“ASC 835”). Homebuilding interest capitalized as a cost of inventories is included in cost of sales as related units or lots are sold. To the extent our homebuilding debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred by us. Qualified homebuilding assets represent projects that are actively selling or under development. For each of the three months ended March 31, 2013 and 2012, we expensed $0.8 million of interest related to the portion of inventories that were deemed unqualified assets in accordance with ASC 835. The table set forth below summarizes homebuilding interest activity.


	Three Months Ended March 31,
	2013			2012
	(Dollars in thousands)
Homebuilding interest incurred	$	14,339		$	10,593
Less: Interest capitalized		(13,522	)		(9,785	)

Homebuilding interest expense	$	817		$	808

Interest capitalized, beginning of period	$	69,143		$	58,742
Interest capitalized during period		13,522			9,785
Less: Previously capitalized interest included in home cost of sales		(9,874	)		(4,894	)

Interest capitalized, end of period	$	72,791		$	63,633