Exhibit 99.1

NEWS
RELEASE                                                                                      

FOR IMMEDIATE RELEASE
CONTACT: Chris L. Nines
                      (512) 433-5210

FORESTAR GROUP INC. REPORTS
SECOND QUARTER 2009 RESULTS

     AUSTIN, TEXAS, August 5, 2009—Forestar Group Inc. (NYSE: FOR) today reported second quarter 2009 net income of $50.9 million, or $1.41 per diluted share, compared with second quarter 2008 net income of $9.6 million, or $0.27 per diluted share outstanding. Second quarter 2009 results include a gain of $1.37 per diluted share, after-tax, from the sale of about 75,000 acres of timberland to Hancock Timber Resource Group for approximately $120 million.

     “During second quarter 2009 we made significant progress in executing our strategic initiatives, which include:

• Selling 75,000 acres of timberland in Georgia and Alabama for approximately $120 million

• Executing agreements for the sale of about 20,000 acres of HBU timberland in Georgia for $39.5 million

• Reducing debt over $110 million

• Lowering operating and general and administrative expenses

• Reducing investment in real estate development

• Improving transparency and disclosure related to our mineral assets, including proved developed producing reserve estimates

     We firmly believe the execution of our strategic initiatives will enhance shareholder value,” said Jim DeCosmo, president and chief executive officer of Forestar Group.

     Forestar Group manages its operations through three business segments:

§	Real estate,
§	Mineral resources, and
§	Fiber resources

     At the end of second quarter 2009, our real estate segment includes over 280,000 acres of land owned directly or through ventures located in nine states and twelve markets. Mineral resources include about 622,000 net acres of oil and gas mineral interests located principally in Texas, Louisiana, Alabama and Georgia. Mineral resources also include a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.38 million acres in Texas, Louisiana, Georgia and Alabama. Fiber resources include the sale of wood fiber and management of our recreational leases.

REAL ESTATE

	2nd Qtr.		2nd Qtr.		1st Qtr.
Segment Earnings	2009		2008		2009
($ in Millions)	$	5.0	$	0.9	$	0.5

     Second quarter 2009 real estate segment earnings were negatively impacted by a $4.1 million loss from equity in earnings of unconsolidated ventures, principally due to an impairment charge related to a venture investment in a project located near Atlanta, Georgia.

     Second quarter 2008 real estate segment earnings were negatively impacted by a $3.5 million charge principally related to environmental remediation activities at our San Joaquin River project located near Antioch, California.

Sales Activity

	2nd Qtr. 2009				2nd Qtr. 2008
	Sales		Price		Sales	Price
Undeveloped Land*	7,460 acres		$2,300 / acre		504 acres	$5,900 / acre
Residential Lots*	165 lots		$59,200 / lot		264 lots	$55,000 / lot
Commercial Acres*		—		—	47 acres	$271,700 / acre

* Includes venture activity

     During second quarter 2009, 7,460 acres of undeveloped land were sold at an average sales price of approximately $2,300 per acre, including a sale of about 5,500 acres of undeveloped land located in some of our most rural locations.

     Residential sales activity for all wholly and partially-owned projects during second quarter 2009 included the sale of 165 lots at an average price of approximately $59,200 per lot.

     No commercial acres were sold in second quarter 2009.

     “Increased undeveloped land sales in second quarter 2009 reflect allocation of additional internal resources and increased marketing efforts focused on generating sales activity,” added Jim DeCosmo.

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Real Estate Pipeline

     At the end of second quarter 2009, our real estate segment includes over 280,000 acres of land owned directly or through ventures located in nine states and twelve markets.

2nd Qtr. 2009 Real Estate Pipeline

			In				Developed &
			Entitlement				Under		Total
Real Estate	Undeveloped		Process		Entitled		Development		Acres*
Undeveloped Land
Owned		223,380								230,257
Ventures		6,877
Residential
Owned				28,535		7,929		718		44,230
Ventures				1,080		4,585		1,383
Commercial
Owned				3,985		1,056		520		6,334
Ventures						518		255
Total Acres		230,257		33,600		14,088		2,876		280,821
Estimated Residential Lots						25,676		4,109		29,785

* Total acres excludes Forestar’s 58% ownership interest in the Ironstob, LLC venture which controls approximately 16,000 acres of undeveloped land

Entitlement Activity

     Including ventures, Forestar has 24 real estate projects representing 33,600 acres in the entitlement process, and over 14,000 acres of entitled land, representing over 25,600 residential lots and almost 1,600 commercial acres.

Development Activity

     Forestar has over 2,800 acres developed and under development owned directly or through ventures. During second quarter 2009 the company invested $7.0 million in real estate development activity, compared with $30.3 million in second quarter 2008. “Excluding our contributions to the resort at Cibolo Canyons, second quarter 2009 investment in development was down over 80% compared with second quarter 2008,” added Mr. DeCosmo.

Investment Activity

     During second quarter 2009, Forestar did not acquire additional real estate.

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MINERAL RESOURCES

	2nd Qtr.		2nd Qtr.		1st Qtr.
Segment Earnings	2009		2008		2009
($ in Millions)	$	6.4	$	23.2	$	4.8

     Second quarter 2008 mineral resources segment earnings include $18.5 million in lease bonus payments generated from 47,000 net mineral acres leased to oil and gas companies for exploration and production activities.

Mineral Activity*
Second Quarter 2009

	Revenues	Activity
Royalties	$2.4 million	Natural Gas Production (MMCF)		309.8
		Average Price / MCF	$	3.89
		Oil Production (Barrels)		24,800
		Average Price / Barrel	$	48.12
Other Lease Revenues	$4.6 million	Acres Leased		8,200
		Average Bonus / Acre	$	357
Total Revenues	$7.0 million

* Includes our share of venture activity

     Including ventures, our share of oil and gas production related to our royalty interests was about 24,800 barrels of oil and approximately 309.8 MMCF of natural gas during second quarter 2009. In addition, Forestar generated other lease revenues of $4.6 million principally related to leasing approximately 8,200 net mineral acres for $357 per acre and delay rentals.

     Forestar’s mineral resources segment includes approximately 622,000 net mineral acres located in Texas, Louisiana, Alabama and Georgia.

Second Quarter 2009
Mineral Ownership

	Available				Held by
State	for Lease*		Leased		Production		Total
Texas		120,000		105,000		19,000		244,000
Louisiana		104,000		10,000		7,000		121,000
Alabama		48,000		9,000		—		57,000
Georgia		200,000		—		—		200,000
		472,000		124,000		26,000		622,000

* Includes approximately 6,500 net acres subject to lease option.

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FIBER RESOURCES

	2nd Qtr.		2nd Qtr.		1st Qtr.
Segment Earnings	2009		2008		2009
($ in Millions)	$	3.3	$	1.4	$	2.9

Fiber Sales Activity

     During second quarter 2009 Forestar generated approximately $4.4 million in revenues from the sale of approximately 380,000 tons of fiber, the majority of which was sold to Temple-Inland Inc. at market prices.

Comments

     “During second quarter 2009 we made significant progress in executing our near-term strategic initiatives, despite difficult market conditions. In addition, we have provided more transparency and disclosure related to our mineral assets, including proved developed producing reserve estimates, which represent only one component of value associated with our mineral interests. We are committed to improving the transparency and disclosure of our mineral assets,” said Mr. DeCosmo.

     “On August 4, 2009 we closed the sale of about 20,000 acres of HBU timberland for approximately $39.5 million. Since the announcement of our strategic initiatives, we have sold over 95,000 acres of timberland for almost $160 million. We firmly believe the execution of our strategic initiatives will enhance shareholder value.”

     The Company will host a conference call on August 5, 2009 at 10:00 am EDT to discuss results of second quarter 2009. The meeting may be accessed through webcast or by conference call. The webcast may be accessed through Forestar’s Internet site at www.forestargroup.com. To access the conference call, listeners calling from North America should dial 1-866-383-7989 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-597-5328. The password is Forestar. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 58581442.

About Forestar Group

     Forestar Group Inc. operates in three business segments: real estate, mineral resources and fiber resources. The real estate segment owns directly or through ventures over 260,000 acres of real estate located in nine states and twelve markets in the U.S. The real estate segment has 24 real estate projects representing 33,600 acres currently in the entitlement process, and 75 entitled, developed and under development projects in seven states and eleven markets encompassing over 16,000 acres, comprised of over 29,700 residential lots and over 2,300 commercial acres. The mineral resources segment manages about 622,000 net acres of oil and gas mineral interests. The fiber resources segment include the sale of wood fiber and management of our recreational leases. The company also has a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.38 million acres in Texas, Louisiana, Georgia and Alabama. Forestar’s address on the World Wide Web is www. forestargroup.com.

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Forward-looking Statements

This release contains “forward-looking statements” within the meaning of the federal securities laws. These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements. Factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; the opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including development costs; demand for new housing, including impacts from mortgage credit availability; lengthy and uncertain entitlement processes; cyclicality of our businesses; accuracy of accounting assumptions; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond our control. Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this news release to reflect the occurrence of events after the date of this news release.

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FORESTAR GROUP INC.
(UNAUDITED)

Business Segments

	Second Quarter						First Six Months
	2009			2008			2009			2008
	(In thousands,						(In thousands,
	except per share)						except per share)
Revenues
Real estate	$	28,447		$	24,118		$	47,234		$	52,561
Mineral resources		7,018			24,386			12,939			30,654
Fiber resources		5,001			3,093			9,370			5,605
Total revenues	$	40,466		$	51,597		$	69,543		$	88,820
Segment earnings
Real estate	$	5,007		$	874		$	5,549		$	4,417
Mineral resources		6,401			23,247			11,183			29,752
Fiber resources		3,290			1,411			6,199			4,251
Total segment earnings		14,698			25,532			22,931			38,420
Items not allocated to segments
General and administrative (a)		(4,257	)		(5,348	)		(11,876	)		(10,354	)
Share-based compensation		(2,615	)		(847	)		(4,321	)		(3,528	)
Gain on sale of assets		79,214			—			79,214			—
Interest expense		(5,047	)		(5,002	)		(10,213	)		(10,668	)
Other non-operating income		44			72			95			154
Income before taxes		82,037			14,407			75,830			14,024
Income tax expense		(31,120	)		(4,811	)		(28,805	)		(4,666	)
Net income attributable to Forestar Group Inc.	$	50,917		$	9,596		$	47,025		$	9,358
Diluted earnings per share:
Net income	$	1.41		$	0.27		$	1.31		$	0.26
Average diluted shares outstanding		36.0			36.1			35.9			36.1

	Second Quarter
	2009		2008
Supplemental Financial Information	(In thousands)
Borrowings under credit facility	$	136,000	$	205,000
Other debt (b)		101,766		92,024
Total debt	$	237,766	$	297,024

(a)	First six months 2009 general and administrative costs include approximately $3.2 million paid to outside advisors regarding an evaluation by our Board of Directors of an unsolicited shareholder proposal.
(b)	Consists principally of consolidated venture non-recourse debt.

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Information about our real estate projects and our ventures for second quarter-end 2009 follows:

	Second Quarter
	2009		2008
Owned & Consolidated Ventures:
Entitled, developed and under development projects
Number of projects		54		56
Residential lots remaining		20,582		20,737
Commercial acres remaining		1,704		1,604
Undeveloped land and land in entitlement process
Number of projects		22		24
Acres in entitlement process		32,520		32,680
Acres undeveloped (a)		224,616		312,880
Ventures accounted for using the equity method:
Ventures’ lot sales (first six months)
Lots sold		89		153
Revenue per lot sold	$	63,835	$	52,549
Ventures’ entitled, developed, and under development projects
Number of projects		21		21
Residential lots remaining		9,203		9,086
Commercial acres sold (first six months)		4		32
Revenue per acre sold	$	196,996	$	281,600
Commercial acres remaining		645		654
Ventures’ undeveloped land and land in entitlement process
Number of projects		2		2
Acres in entitlement process		1,080		920
Acres sold (first six months)		—		—
Revenue per acre sold	$	—	$	—
Acres undeveloped		5,641		6,127

^(a) Includes 95,000 acres classified as assets held for sale.

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A summary of projects in the entitlement process^(a) at second quarter-end 2009 follows:

		Project
Project	County	Acres(b)
California
Hidden Creek Estates	Los Angeles		700
Terrace at Hidden Hills	Los Angeles		30
Georgia
Ball Ground	Cherokee		500
Burt Creek	Dawson		970
Creekview	Troup		470
Crossing	Coweta		230
Dallas Highway	Haralson		1,060
Fincher Road	Cherokee		3,950
Fox Hall	Coweta		960
Garland Mountain	Cherokee/Bartow		350
Home Place	Coweta		1,510
Hutchinson Mill	Troup		880
Jackson Park	Jackson		700
Martin’s Bridge	Banks		970
Mill Creek	Coweta		770
Serenity	Carroll		440
Three Creeks	Troup		740
Waleska	Cherokee		150
Wolf Creek	Carroll/Douglas		12,230
Yellow Creek	Cherokee		1,060
Texas
Lake Houston	Harris/Liberty		3,700
San Jacinto	Montgomery		150
Entrada(c)	Travis		240
Woodlake Village(c)	Montgomery		840
Total			33,600

(a)	A project is deemed to be in the entitlement process when customary steps necessary for the preparation and submittal of an application, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining, and there is no assurance that entitlements ultimately will be received.
(b)	Project acres, which are the total for the project regardless of our ownership interest, are approximate. The actual number of acres entitled may vary.
(c)	We own a 50% interest in these projects.

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A summary of activity within our entitled,^(a) developed and under development projects at second quarter-end 2009 follows:

					Residential Lots(c)				Commercial Acres(d)
					Lots Sold				Acres Sold
		Interest			Since		Lots		Since		Acres
Project	County	Owned(b)			Inception		Remaining		Inception		Remaining
Projects we own
California
San Joaquin River	Contra		100	%		—		—		—		288
	Costa/Sacramento
Colorado
Buffalo Highlands	Weld		100	%		—		164		—		—
Johnstown Farms	Weld		100	%		115		493		2		8
Pinery West	Douglas		100	%		—		—		—		115
Stonebraker	Weld		100	%		—		603		—		13
Westlake Highlands	Jefferson		100	%		—		21		—		—
Texas
Arrowhead Ranch	Hays		100	%		—		232		—		6
Caruth Lakes	Rockwall		100	%		263		386		—		—
Cibolo Canyons	Bexar		100	%		570		1,177		64		81
Harbor Lakes	Hood		100	%		199		250		—		14
Harbor Mist	Calhoun		100	%		—		200		—		—
Hunter’s Crossing	Bastrop		100	%		308		183		38		68
La Conterra	Williamson		100	%		44		465		—		60
Maxwell Creek	Collin		100	%		655		356		10		—
Oak Creek Estates	Comal		100	%		14		634		13		—
The Colony	Bastrop		100	%		409		2,238		22		49
The Gables at North Hill	Collin		100	%		195		88		—		—
The Preserve at Pecan Creek	Denton		100	%		218		600		—		9
The Ridge at Ribelin Ranch	Travis		100	%		—		—		179		16
Westside at Buttercup Creek	Williamson		100	%		1,283		238		66		—
Other projects (7)	Various		100	%		1,544		25		197		23
Georgia
Towne West	Bartow		100	%		—		2,674		—		121
Other projects (14)	Various		100	%		—		3,054		—		705
Missouri and Utah
Other projects (2)	Various		100	%		403		361		—		—
						6,220		14,442		591		1,576
Projects in entities we consolidate
Texas
City Park	Harris		75	%		1,099		212		50		105
Lantana	Denton		55	% (e)		442		1,839		—		—
Light Farms	Collin		65	%		—		2,517		—		—
Stoney Creek	Dallas		90	%		67		687		—		—
Timber Creek	Collin		88	%		—		614		—		—
Other projects (5)	Various	Various				936		271		24		23
						2,544		6,140		74		128
Total owned and consolidated						8,764		20,582		665		1,704
Projects in ventures that we account for using the equity method
Georgia
Seven Hills	Paulding		50	%		634		446		26		—
The Georgian	Paulding		38	%		288		1,097		—		—
Other projects (5)	Various	Various				1,845		249		3		—
Texas
Bar C Ranch	Tarrant		50	%		176		1,023		—		—
Fannin Farms West	Tarrant		50	%		271		109		—		15
Lantana	Denton	Various (e)				1,436		34		14		75
Long Meadow Farms	Fort Bend		19	%		604		1,502		72		138
Southern Trails	Brazoria		40	%		357		670		—		—
Stonewall Estates	Bexar		25	%		192		189		—		—
Summer Creek Ranch	Tarrant		50	%		796		1,772		—		363
Summer Lakes	Fort Bend		50	%		325		798		56		—
Village Park	Collin		50	%		339		221		3		2
Waterford Park	Fort Bend		50	%		—		493		—		37
Other projects (2)	Various	Various				296		228		—		15
Florida
Other projects (3)	Various	Various				473		372		—		—
Total in ventures						8,032		9,203		174		645
Combined Total						16,796		29,785		839		2,349

(a)	A project is deemed entitled when all major discretionary land-use approvals have been received. Some projects may require additional permits for development.
(b)	Interest owned reflects our net equity interest in the project, whether owned directly or indirectly. There are some projects that have multiple ownership structures within them. Accordingly, portions of these projects may appear as owned, consolidated and/or accounted for using the equity method.
(c)	Lots are for the total project, regardless of our ownership interest.
(d)	Commercial acres are for the total project, regardless of our ownership interest and are net developable acres, which may be fewer than the gross acres available in the project.

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^(e) The Lantana project consists of a series of 15 partnerships in which our voting interests range from 25% to 55%. We account for three of these partnerships using the equity method and we consolidate the remaining partnerships.

     A summary of our commercial operating properties, commercial projects and condominium projects at second quarter-end 2009 follows:

			Interest
Project	County	Market	Owned(a)			Type	Description
Radisson Hotel	Travis	Austin		100	%	Hotel	413 guest rooms and suites
Palisades West	Travis	Austin		25	%	Office	375,000 square feet
Presidio at Judge’s Hill	Travis	Austin		60	%	Condo	45 units
Las Brisas	Williamson	Austin		49	%	Multi-Family	414 unit luxury apartment
Harbor Lakes Golf Club	Hood	Dallas/Fort Worth		100	%	Golf Club	18-hole golf course and club
Gulf Coast Apartments	Various	Various		2	%	Multi-Family	9 apartment communities

^(a) Interest owned reflects our net equity interest in the project, whether owned directly or indirectly.

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