We had 427 and 452 communities under development and held for future development or sale at July 31, 2026 and 2025, respectively, which we evaluated for impairment indicators. During the nine months ended July 31, 2026, we performed undiscounted future cash flows analyses for six communities with an aggregate carrying value of $32.5 million. Based on the analyses, two communities in the Southeast segment and two communities in the West segment, with an aggregate carrying value of $21.7 million, were deemed impaired. The related impairment analyses resulted in an impairment charge of $5.3 million, which was included within “Inventory impairments and land option write-offs” in the Condensed Consolidated Statement of Operations and deducted from inventory. During the three months ended July 31, 2025, we identified impairment indicators in one community in the Northeast segment and three communities in the West segment, with an aggregate carrying value of $35.9 million. During the nine months ended July 31, 2025, we identified impairment indicators in two communities in the Northeast segment and three communities in the West segment with an aggregate carrying value of $41.3 million. The related impairment analyses resulted in impairment charges of $7.6 million and $8.8 million during the three and nine months ended July 31, 2025, respectively, which were included within “Inventory impairments and land option write-offs” in the Condensed Consolidated Statement of Operations and deducted from inventory.

Write-offs of options, engineering and capitalized interest costs are recorded in "Inventory impairments and land option write-offs" when we redesign communities, abandon certain engineering costs or do not exercise options in various locations because the pro forma profitability is not projected to produce adequate returns on investment commensurate with the risk. Total aggregate write-offs related to these items were $0.5 million and $8.4 million for the three months ended July 31, 2026 and 2025, respectively, and $6.3 million and $11.3 million for the nine months ended July 31, 2026 and 2025, respectively. The number of lots we walked away from during the three months ended July 31, 2026 and 2025 were 962 and 4,059, respectively, and 3,712 and 8,956 during the nine months ended July 31, 2026 and 2025, respectively. The walk-aways during the first three quarters of fiscal 2026 and 2025 occurred across each of our segments.

We sell and lease back certain of our model homes with the right to participate in the potential profit when each home is sold to a third-party at the end of the respective lease. As a result of our continued involvement and the ability to repurchase model homes with below market options, for accounting purposes in accordance with ASC 606, these sale and leaseback transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheets as of July 31, 2026 and October 31, 2025, included inventory of $63.1 million and $74.3 million, respectively, recorded to “Consolidated inventory not owned” with a corresponding amount of $63.7 million and $75.6 million (net of debt issuance costs), respectively, recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.

We have land banking arrangements, whereby we sell our land parcels to a land banker and they provide us an option to purchase back finished lots on a predetermined schedule. Because of our options to repurchase these parcels, for accounting purposes in accordance with ASC 606, these transactions are considered a financing rather than a sale. Our Condensed Consolidated Balance Sheets as of July 31, 2026 and October 31, 2025, included inventory of $285.1 million and $258.6 million, respectively, recorded to “Consolidated inventory not owned” with a corresponding amount of $164.9 million and $169.1 million (net of debt issuance costs), respectively, recorded to “Liabilities from inventory not owned” for the amount of net cash received from the transactions.