8.	Inventories

Inventories Owned

Inventories owned consisted of the following at:

	March 31, 2017
	North		Southeast		Southwest		West		Total
	(Dollars in thousands)

Land and land under development (1)	$	418,256	$	1,119,696	$	580,263	$	1,381,594	$	3,499,809
Homes completed and under construction		396,682		720,209		768,655		687,930		2,573,476
Model homes		74,753		133,945		115,607		158,685		482,990
Total inventories owned	$	889,691	$	1,973,850	$	1,464,525	$	2,228,209	$	6,556,275

	December 31, 2016
	North		Southeast		Southwest		West		Total
	(Dollars in thousands)

Land and land under development (1)	$	445,245	$	1,177,646	$	594,585	$	1,410,264	$	3,627,740
Homes completed and under construction		327,421		585,938		710,509		680,241		2,304,109
Model homes		79,306		132,968		116,575		178,094		506,943
Total inventories owned	$	851,972	$	1,896,552	$	1,421,669	$	2,268,599	$	6,438,792

(1)

During the

three

months ended

March

31,

2017,

we purchased

$165.3

million of land

(3,075

homesites), of which

34%

(based on homesites) were located in the North,

36%

in the Southeast,

25%

in the Southwest, and

in the West. During the year ended

December

31,

2016,

we purchased

$960.8

million of land

(13,566

homesites), of which

25%

(based on homesites) were located in the North,

25%

in the Southeast,

24%

in the Southwest, and

26%

in the West.

In accordance with ASC Topic

360,

Property, Plant, and Equipment

("ASC

360"),

we record impairment losses on inventories when events and circumstances indicate that they

may

be impaired, and the future undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. We perform a detailed budget and cash flow review of all of our real estate communities (including actively selling communities, future communities and communities on hold/inactive) on a semi-annual basis throughout each fiscal year to, among other things, determine whether the community’s estimated remaining undiscounted future cash flows are more or less than the carrying value of the inventory balance. Inventories that are determined to be impaired are written down to their estimated fair value. We calculate the fair value of a community under a land residual value analysis and in certain cases in conjunction with a discounted cash flow analysis. As of

March

31,

2017

and

2016,

the total active and future communities that we owned were

815

and

762,

respectively. During the

three

months ended

March

31,

2017

and

2016,

we reviewed all communities for indicators of impairment and based on our review we did

not

record any inventory impairments during these periods.

Inventories Not Owned

Inventories not owned as of

March

31,

2017

and

December

31,

2016

consisted of land purchase and lot option deposits outstanding at the end of each period, and purchase price allocated to lot option contracts assumed in connection with business acquisitions. Under ASC Topic

810,

Consolidation

("ASC

810"),

a non-refundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we

may

also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as inventories owned, which we would have to write-off should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a non-refundable deposit, a variable interest entity ("VIE")

may

have been created. In accordance with ASC

810,

we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.