Forestar Group Inc. Reports $390.5M Revenue, Net Income Declines Amid Rising Costs

Forestar Group Inc. reported a consolidated revenue of $390.5 million for the three months ended June 30, 2025, marking a 22.6% increase from $318.4 million in the same period last year. For the nine months ending June 30, 2025, total revenues reached $991.9 million, a 3.5% increase compared to $958.0 million for the prior year. However, net income for the quarter decreased to $32.9 million, or $0.65 per diluted share, down from $38.7 million, or $0.76 per diluted share, in the previous year. For the nine-month period, net income was $81.0 million, a decline from $121.8 million in the prior year, reflecting a decrease in profitability amid rising costs and market challenges.

The company experienced significant changes in its financial metrics compared to the previous fiscal period. The cost of sales increased to $310.8 million for the quarter, up from $246.9 million, while selling, general, and administrative expenses rose to $37.4 million from $29.3 million. The increase in costs was attributed to higher lot sales revenues and operational expenses, which outpaced revenue growth. Additionally, Forestar's total assets increased to $3.12 billion as of June 30, 2025, compared to $2.84 billion at the end of the previous fiscal year, driven primarily by a rise in real estate holdings.

Strategically, Forestar has continued to expand its operations, now managing a portfolio of 102,300 residential lots across 64 markets in 23 states. The company sold 9,349 lots during the nine months ended June 30, 2025, with an average sales price of $104,500 per lot, reflecting a 9% increase in average sales price year-over-year. The company’s relationship with D.R. Horton, which owns approximately 62% of Forestar, remains a critical component of its strategy, facilitating access to a broader customer base and enhancing operational efficiencies.

Operationally, Forestar's employee headcount increased to 443 as of June 30, 2025, up from 376 a year earlier, indicating a commitment to scaling its workforce in response to growth opportunities. The company reported a decrease in residential lots sold to D.R. Horton, which fell to 7,688 lots in the nine months ended June 30, 2025, down from 8,842 lots in the prior year. This decline was offset by increased sales to other customers, highlighting a diversification in its customer base.

Looking ahead, Forestar anticipates continued challenges in the housing market, including affordability constraints and cautious consumer sentiment. The company plans to focus on developing lots for affordable housing while managing costs and pricing strategies to optimize returns. With a strong liquidity position, including $189.2 million in cash and $602.8 million in available borrowing capacity, Forestar is well-positioned to navigate the evolving market landscape and pursue growth opportunities in residential lot development.