Exhibit 99.1

NEWS

RELEASE

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

FORESTAR GROUP INC. REPORTS
SECOND QUARTER 2010 RESULTS

     AUSTIN, TEXAS, August 3, 2010—Forestar Group Inc. (NYSE: FOR) today reported a second quarter 2010 net loss of approximately ($3.3) million, or ($0.09) per basic share, compared with second quarter 2009 net income of $50.9 million, or $1.41 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 in Georgia and Alabama for approximately $120 million.

     “Our second quarter results reflect current market conditions across our businesses,” said Jim DeCosmo, president and chief executive officer of Forestar Group. “Demand for residential lots and commercial tracts have been impacted principally from low consumer confidence, high levels of unemployment, reduced capital availability, and uncertainty regarding the future of the economy. Mineral leasing activity was affected by exploration and production companies concentrating their efforts on drilling wells to hold existing mineral leases and prove reserves, rather than investing in new mineral interests.”

     “Despite challenging market conditions, we firmly believe that our business is well positioned in many of the healthiest markets, and poised to benefit from improving economic conditions and positive long-term demographic trends,” concluded Mr. DeCosmo.

     Forestar Group manages its operations through three business segments:

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

     At the end of second quarter 2010, our real estate segment includes over 247,000 acres of land owned directly or through ventures located in nine states and twelve markets. Mineral resources include approximately 620,000 net acres of oil and gas mineral interests located principally in Texas, Louisiana, Alabama, and Georgia. Also included in the mineral resources segment is a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.4 million acres in Texas, Louisiana, Georgia and Alabama.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	2010		2009		2010
($ in Millions)	$	2.4	$	5.0	$	0.3

     Second quarter 2010 real estate segment earnings include the sale of approximately 700 acres of land in the entitlement process for almost $8,200 per acre near Atlanta, Georgia.

     During second quarter 2010, a joint-venture project located near Houston, Texas received entitlements, which is planned to include up to 1,722 residential lots and 72 commercial acres.

MINERAL RESOURCES

	2nd Qtr.		2nd Qtr.		1st Qtr.
Segment Earnings	2010		2009		2010
($ in Millions)	$	4.3	$	6.4	$	6.2

     Second quarter 2010 mineral resources segment earnings were impacted by reduced mineral leasing activity. Since year-end 2009, exploration and production companies operating in our basins have concentrated their efforts on drilling wells to hold existing mineral leases and prove reserves.

     First quarter 2010 mineral resources segment earnings include approximately $3.2 million in lease bonus revenues associated with leasing over 2,100 net mineral acres for $1,495 per acre.

FIBER RESOURCES

	2nd Qtr.		2nd Qtr.		1st Qtr.
Segment Earnings	2010		2009		2010
($ in Millions)	$	1.1	$	3.3	$	1.4

     During second quarter 2010 Forestar generated approximately $1.5 million from the sale of over 119,000 tons of fiber, the majority of which was sold to Temple-Inland Inc. at market prices. Sales of fiber in second quarter 2010 were impacted by the sale of over 110,000 acres of timberland in 2009 associated with our near-term strategic initiatives and retail land sales program and postponing harvest plans on approximately 74,000 acres currently held for sale.

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SUMMARY

     “Market conditions remain challenging for our business. Demand for our real estate has been impacted by a lack of consumer confidence, high unemployment, reduced credit availability and concerns over the economy, despite mortgage rates at historic lows and improved housing affordability. However, several Texas markets are now reporting positive job growth in second quarter 2010, a fundamental driver of long-term housing demand. Forestar is well positioned to maximize and grow long-term shareholder value through the execution of our strategy and improving market conditions,” concluded Mr. DeCosmo.

     The Company will host a conference call on August 4, 2010 at 10:00 am EDT to discuss results of second quarter 2010. 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 1-866-730-5769 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-857-350-1593. 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 64750709.

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 247,000 acres of real estate located in nine states and twelve markets in the U.S. The real estate segment has 18 real estate projects representing over 29,600 acres currently in the entitlement process, and 75 entitled, developed and under development projects in seven states and eleven markets encompassing over 16,800 acres, comprised of over 29,300 residential lots and almost 2,600 commercial acres. The mineral resources segment manages about 620,000 net acres of oil and gas mineral interests. The fiber resources segment includes 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 1.4 million acres in Texas, Louisiana, Georgia and Alabama. Forestar’s address on the World Wide Web is www.forestargroup.com.

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
	2010			2009			2010			2009
	(In thousands,						(In thousands,
	except per share)						except per share)
Revenues
Real estate	$	21,549		$	28,447		$	38,797		$	47,234
Mineral resources		4,606			7,018			11,733			12,939
Fiber resources		1,982			5,001			3,965			9,370
Total revenues	$	28,137		$	40,466		$	54,495		$	69,543
Segment earnings
Real estate	$	2,454		$	5,007		$	2,766		$	5,549
Mineral resources		4,266			6,401			10,444			11,183
Fiber resources		1,085			3,290			2,528			6,199
Total segment earnings		7,805			14,698			15,738			22,931
Items not allocated to segments
General and administrative (a)		(5,040	)		(4,257	)		(9,578	)		(11,876	)
Share-based compensation		(2,019	)		(2,615	)		(5,553	)		(4,321	)
Gain on sale of assets		—			79,214			—			79,214
Interest expense		(4,103	)		(5,047	)		(8,649	)		(10,213	)
Other non-operating income		246			44			444			95
(Loss) income before taxes		(3,111	)		82,037			(7,598	)		75,830
Income tax (expense) benefit		(162	)		(31,120	)		1,353			(28,805	)
Net (loss) income attributable to Forestar Group Inc.	$	(3,273	)	$	50,917		$	(6,245	)	$	47,025
Net (loss) income per common share:
Basic	$	(0.09	)	$	1.42		$	(0.17	)	$	1.32
Diluted	$	(0.09	)	$	1.41		$	(0.17	)	$	1.31
Weighted average common shares outstanding:
Basic		36.2			35.8			36.1			35.7
Diluted		36.2			36.0			36.1			35.9

	Second Quarter
Supplemental Financial Information	2010		2009
	(In thousands)
Borrowings under credit facility	$	128,000	$	136,000
Other debt (b)		74,196		101,766
Total debt	$	202,196	$	237,766

(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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FORESTAR GROUP INC.
REAL ESTATE SEGMENT
PERFORMANCE METRICS

	Second Quarter				First Six Months
REAL ESTATE	2010		2009		2010		2009
Owned, Consolidated & Equity Method Ventures:
Residential Lots Sold		235		165		430		272
Revenue per Lot Sold	$	50,300	$	59,200	$	49,900	$	64,400
Commercial Acres Sold		14.6		—		16.2		4.1
Revenue per Commercial Acre Sold	$	58,800		—	$	70,200	$	215,600
Undeveloped Acres Sold		1,470		7,460		3,560		9,650
Revenue per Acre Sold	$	5,600	$	2,300	$	3,600	$	2,600
Owned & Consolidated Ventures:
Residential Lots Sold		149		105		251		183
Revenue per Lot Sold	$	53,000	$	59,300	$	54,800	$	64,700
Commercial Acres Sold		—		—		1.3		0.3
Revenue per Commercial Acre Sold		—		—	$	121,700	$	424,700
Undeveloped Acres Sold		1,470		7,460		3,560		9,650
Revenue per Acre Sold	$	5,600	$	2,300	$	3,600	$	2,600
Ventures Accounted For Using the Equity Method:
Residential Lots Sold		86		60		179		89
Revenue per Lot Sold	$	45,600	$	59,100	$	43,100	$	63,800
Commercial Acres Sold		14.6		—		14.9		3.8
Revenue per Commercial Acre Sold	$	58,800		—	$	65,700	$	197,000
Undeveloped Acres Sold		—		—		—		—
Revenue per Acre Sold		—		—		—		—

SECOND QUARTER 2010
REAL ESTATE PIPELINE

			In				Developed &
			Entitlement				Under		Total
Real Estate	Undeveloped		Process		Entitled		Development		Acres*
Undeveloped Land
Owned		194,142								200,905
Ventures		6,763
Residential
Owned				26,869		7,956		580		41,098
Ventures						4,939		754
Commercial
Owned				2,801		1,095		539		5,393
Ventures						642		316
Total Acres		200,905		29,670		14,632		2,189		247,396
Estimated Residential Lots						25,727		3,590		29,317

* In addition, Forestar owns a 58% interest in a venture which controls approximately 16,000 acres of undeveloped land in Georgia with minimal investment.

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FORESTAR GROUP INC.
MINERAL RESOURCES SEGMENT
PERFORMANCE METRICS

	Second Quarter				First Six Months
MINERAL RESOURCES	2010		2009		2010		2009
Leasing Activity
Acres Leased		—		8,200		2,130		14,300
Average Bonus / Acre		—	$	357	$	1,495	$	353
Delay Rental Revenues	$	762,200	$	1,595,000	$	1,193,800	$	1,916,600
Royalties1
Natural Gas Production (MMcf)		689.5		309.8		1,062.6		704.5
Average Natural Gas Price ($ / Mcf)	$	4.60	$	3.89	$	4.49	$	5.17
Oil Production (Barrels)		30,500		25,900		59,900		53,200
Average Oil Price ($ / Barrel)	$	74.78	$	47.30	$	73.05	$	47.03
MMcfe Production2		872.3		465.2		1,422.1		1,023.8
Average Price ($ / MMcfe)	$	6.25	$	5.23	$	6.43	$	6.00
Well Activity3
Net Acres Held By Production		29,469		25,804		29,469		25,804
Wells Drilled		5		4		16		7
Active Wells		479		464		479		464

1	Includes 100% of venture activity. Venture natural gas production activity is 362 MMcf and 415 MMcf in second quarter and first six months 2010, and 12 MMcf and 39 MMcf in second quarter and first six months 2009. Forestar owns a 50% interest in this venture.
2	MMcfe — Million Cubic Feet Equivalent (converting oil to natural gas at 6 Mcfe / Bbl)
3	Wells are owned and operated by third-party lessees / operators

SECOND QUARTER 2010
MINERAL RESOURCES PIPELINE¹

     Forestar’s mineral resources segment includes approximately 620,000 net mineral acres principally located in Texas, Louisiana, Alabama and Georgia.

	Available				Held by
State	for Lease		Leased		Production		Total 2
Texas		153,000		76,000		24,000		253,000
Louisiana		135,000		4,000		5,000		144,000
Georgia		179,000		—		—		179,000
Alabama		40,000		2,000		—		42,000
California		1,000		—		—		1,000
Indiana		1,000		—		—		1,000
Total		509,000		82,000		29,000		620,000

1	Includes ventures
2	Excludes 463 net mineral acres located in Colorado

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FORESTAR GROUP INC.
FIBER RESOURCES SEGMENT
PERFORMANCE METRICS

	Second Quarter				First Six Months
FIBER RESOURCES	2010		2009		2010		2009
Fiber Sales *
Pulpwood Tons Sold		95,600		244,100		178,700		450,600
Average Pulpwood Price / Ton	$	10.89	$	7.85	$	10.90	$	7.99
Sawtimber Tons Sold		23,800		136,100		53,400		226,900
Average Sawtimber Price / Ton	$	20.36	$	18.28	$	20.24	$	20.10
Total Tons Sold		119,400		380,200		232,100		677,500
Average Price / Ton	$	12.78	$	11.59	$	13.05	$	12.05
Recreational Activity
Acres Leased		213,700		224,500		213,700		224,500

* The majority of our fiber sales were to Temple-Inland Inc. at market prices.

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FORESTAR GROUP INC.
PROJECTS IN ENTITLEMENT

     A summary of projects in the entitlement process(a) at second quarter-end 2010 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
Crossing	Coweta		230
Dallas Highway	Haralson		1,060
Fincher Road	Cherokee		3,890
Fox Hall	Coweta		960
Garland Mountain	Cherokee/Bartow		350
Home Place	Coweta		1,510
Martin’s Bridge	Banks		970
Mill Creek	Coweta		770
Serenity	Carroll		440
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
Total			29,670

(a)

A project is deemed to be in the entitlement process when customary steps necessary for the preparation of an application for governmental land-use approvals, 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.

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FORESTAR GROUP INC.
REAL ESTATE PROJECTS

     A summary of our entitled,^(a) developed & under development projects at second quarter-end 2010 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 Costa/Sacramento	100%		—		—		—		288
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%		19		2		—		—
Texas
Arrowhead Ranch	Hays	100%		—		259		—		6
Caruth Lakes	Rockwall	100%		297		352		—		—
Cibolo Canyons	Bexar	100%		617		798		64		157
Harbor Lakes	Hood	100%		199		250		1		13
Hunter’s Crossing	Bastrop	100%		330		161		38		71
La Conterra	Williamson	100%		73		427		—		58
Maxwell Creek	Collin	100%		691		320		10		—
Oak Creek Estates	Comal	100%		67		580		13		—
The Colony	Bastrop	100%		410		736		22		31
The Gables at North Hill	Collin	100%		197		86		—		—
The Preserve at Pecan Creek	Denton	100%		306		512		—		9
The Ridge at Ribelin Ranch	Travis	100%		—		—		179		16
Westside at Buttercup Creek	Williamson	100%		1,311		203		66		—
Other projects (8)	Various	100%		1,552		17		197		23
Georgia
Towne West	Bartow	100%		—		2,674		—		121
Other projects (13)	Various	100%		—		2,934		—		705
Missouri and Utah
Other projects (2)	Various	100%		453		101		—		—
				6,637		11,672		592		1,634
Projects in entities we consolidate
Texas
City Park	Harris	75%		1,100		211		50		115
Lantana	Denton	55% (e)		540		1,626		—		—
Light Farms	Collin	65%		—		2,868		—		—
Stoney Creek	Dallas	90%		85		669		—		—
Timber Creek	Collin	88%		—		614		—		—
Other projects (5)	Various	Various		953		254		26		25
				2,678		6,242		76		140
Total owned and consolidated				9,315		17,914		668		1,774
Projects in ventures that we account for using the equity method
Georgia
Seven Hills	Paulding	50%		635		446		26		113
The Georgian	Paulding	38%		288		1,097		—		—
Other projects (4)	Various	Various		1,820		77		3		—
Texas
Bar C Ranch	Tarrant	50%		215		984		—		—
Entrada	Travis	50%		—		821		—		3
Fannin Farms West	Tarrant	50%		293		88		—		15
Harper’s Preserve	Montgomery	50%		—		1,722		—		72
Lantana	Denton	Various (e)		1,436		134		14		75
Long Meadow Farms	Fort Bend	19%		636		1,447		87		123
Southern Trails	Brazoria	40%		398		629		—		—
Stonewall Estates	Bexar	25%		248		125		—		—
Summer Creek Ranch	Tarrant	50%		796		1,772		—		363
Summer Lakes	Fort Bend	50%		330		793		56		—
Village Park	Collin	50%		356		211		3		2
Waterford Park	Fort Bend	50%		—		493		—		37
Other projects (2)	Various	Various		296		228		—		15
Florida
Other projects (3)	Various	Various		509		336		—		—
Total in ventures				8,256		11,403		189		818
Combined Total				17,571		29,317		857		2,592

(a)	A project is deemed entitled when all major discretionary governmental land-use approvals have been received. Some projects may require additional permits and/or non-governmental authorizations 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. Lots remaining represent vacant developed lots, lots under development and future planned lots and are subject to change based on business plan revisions.

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(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.
(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 significant commercial and income producing properties at second quarter-end 2010 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
Las Brisas	Williamson	Austin		59	%	Multifamily	414 unit luxury apartment

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

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