Inventory

12 Months Ended

Oct. 31, 2023

Inventory at October 31, 2023 and 2022 consisted of the following (amounts in thousands):


	2023		2022
Land controlled for future communities	$	173,175	$	240,751
Land owned for future communities	663,413		808,851
Operating communities	8,220,990		7,683,724
	$	9,057,578	$	8,733,326

Operating communities include communities offering homes for sale; communities that have sold all available home sites but have not completed delivery of the homes; and communities preparing to open for sale. The carrying value attributable to operating communities includes the cost of homes under construction, land and land development costs, the carrying cost of home sites in current and future phases of these communities, and the carrying cost of model homes.

Communities that were previously offering homes for sale but are temporarily closed due to business conditions, do not have any remaining backlog, and are not expected to reopen within 12 months of the end of the fiscal period being reported on are included in land owned for future communities. Backlog consists of homes under contract but not yet delivered to our home buyers (“backlog”).

The amounts we have provided for inventory impairment charges and the expensing of costs that we believed not to be recoverable in each of the three fiscal years ended October 31, 2023, 2022, and 2021, are shown in the table below (amounts in thousands):


Charge:	2023		2022		2021
Land controlled for future communities	$	10,712	$	13,051	$	5,620
Land owned for future communities	1,493		19,690		19,805
Operating communities	18,501		—		1,110
	$	30,706	$	32,741	$	26,535

We have also recognized $30.6 million and $6.8 million of impairment charges on land held for sale included in land sales and other cost of revenues during the fiscal years ended October 31, 2023 and 2022, respectively.

See Note 14, “Commitments and Contingencies,” for information regarding land purchase contracts.

At October 31, 2023, we evaluated our land purchase contracts, including those to acquire land for apartment developments, to determine whether any of the selling entities were VIEs and, if they were, whether we were the primary beneficiary of any of them. Under these land purchase contracts, we do not possess legal title to the land; our maximum exposure to loss is generally limited to deposits paid to the sellers and predevelopment costs incurred; and the creditors of the sellers generally have no recourse against us. At October 31, 2023, we determined that 251 land purchase contracts, with an aggregate purchase price of $3.79 billion, on which we had made aggregate deposits totaling $421.4 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts. At October 31, 2022, we determined that 237 land purchase contracts, with an aggregate purchase price of $3.89 billion, on which we had made aggregate deposits totaling $417.6 million, were VIEs, but that we were not the primary beneficiary of any VIE related to such land purchase contracts.

Interest incurred, capitalized, and expensed in each of the three fiscal years ended October 31, 2023, 2022, and 2021, was as follows (amounts in thousands):


	2023		2022		2021
Interest capitalized, beginning of year	$	209,468	$	253,938	$	297,975
Interest incurred	140,426		135,029		152,986
Interest expensed to home sales cost of revenues	(139,410)		(164,831)		(187,237)
Interest expensed to land sales and other cost of revenues	(10,787)		(5,788)		(4,372)

Interest reclassified to property, construction and office equipment - net	—		—		(1,034)
Interest capitalized on investments in unconsolidated entities	(9,783)		(6,699)		(4,574)
Previously capitalized interest transferred to investments in unconsolidated entities	(244)		(2,412)		—
Previously capitalized interest on investments in unconsolidated entities transferred to inventory	880		231		194
Interest capitalized, end of year	$	190,550	$	209,468	$	253,938