Land Under Development

On a limited basis, NVR directly acquires raw parcels of land already zoned for its intended use to develop into finished lots. Land under development includes the land acquisition costs, direct improvement costs, capitalized interest, where applicable, and real estate taxes. As of September 30, 2012, NVR directly owned three separate raw parcels of land with a carrying value of $71,102 that it intends to develop into approximately 770 finished lots for use in its homebuilding operations. The Company capitalizes interest costs to land under development during the active development of finished lots. Capitalized interest is charged to cost of sales as finished lots are sold. Interest incurred during the period in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred. Interest cost incurred for the three months ended September 30, 2012 was approximately $1,500, of which approximately $170 was capitalized. None of the raw parcels had any indicators of impairment as of September 30, 2012. Based on current market conditions, NVR may, on a very limited basis, directly acquire additional raw parcels to develop into finished lots. See the Overview section of Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations included herein for additional discussion.