Exhibit 99.1

NEWS
RELEASE

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

FORESTAR GROUP INC. REPORTS
FIRST QUARTER 2009 RESULTS

     AUSTIN, TEXAS, May 6, 2009—Forestar Group Inc. (NYSE: FOR) today reported first quarter 2009 net loss of ($3.9) million, or ($0.11) per basic share, compared with first quarter 2008 net loss of ($0.2) million, or ($0.01) per basic share outstanding. First quarter 2009 results include approximately $3.2 million paid to outside advisors regarding an evaluation by our Board of Directors of an unsolicited shareholder proposal.

     “Market conditions continue to be challenging for each of our segments,” said Jim DeCosmo, president and chief executive officer of Forestar Group. “Even with a significant slowdown in real estate sales, we are focused on positioning Forestar to generate positive cash flow by significantly reducing investment in real estate development and lowering costs.”

     Forestar Group manages its operations through three business segments:

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

     Our real estate segment includes over 363,000 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 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 Mineral resources also include a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.38 million acres in Texas, Louisiana, Georgia and Alabama.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, primarily in Georgia, and manages our recreational leases.

REAL ESTATE

	1st Qtr.		1st Qtr.		4th Qtr.
Segment Earnings	2009		2008		2008
($ in Millions)	$	0.5	$	3.5	$	3.0

     First quarter 2009 real estate segment earnings were negatively impacted by $1.2 million principally associated with an impairment charge and increased legal reserves.

Sales Activity

	Q1 2009		Q1 2008
	Sales	Price	Sales	Price
Undeveloped Land*	2,192 acres	$3,800 / acre	1,349 acres	$4,600 / acre
Residential Lots*	107 lots	$72,400 / lot	388 lots	$46,200 / lot
Commercial Acres*	4 acres	$215,600 / acre	22 acres	$84,700 / acre

* Includes venture activity

     During first quarter 2009, 2,192 acres of undeveloped land were sold at an average sales price of approximately $3,800 per acre.

     Residential sales activity for all wholly and partially-owned projects during first quarter 2009 included the sale of 107 lots at an average price of approximately $72,400 per lot. First quarter 2008 residential lot sales activity includes the sale of 192 high density lots for approximately $24,300 per lot at a mixed-used venture located near Houston, Texas.

     Commercial activity for all wholly and partially-owned projects during first quarter 2009 included the sale of four acres at an average price of approximately $215,600 per acre.

     “Although residential lot sales have declined, our average residential lot price has remained stable, driven by the quality and location of our residential and mixed-use real estate developments,” added Jim DeCosmo.

Real Estate Pipeline

     Forestar’s real estate segment includes over 363,000 acres of land owned directly or through ventures located in nine states and twelve markets.

Q1 2009 Real Estate Pipeline

			In				Developed &
			Entitlement				Under		Total
Real Estate	Undeveloped		Process		Entitled		Development		Acres*
Undeveloped Land
Owned		305,857								312,734
Ventures		6,877
Residential
Owned				28,535		7,932		735		44,119
Ventures				1,080		4,603		1,234
Commercial
Owned				3,985		1,056		520		6,334
Ventures						518		255
Total Acres		312,734		33,600		14,109		2,744		363,187
Estimated Residential Lots						25,450		4,315		29,765

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

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Entitlement Activity

     Forestar has 24 real estate projects representing 33,600 acres in the entitlement process, including ventures. During first quarter 2009, we entitled one project located near Atlanta, Georgia which includes about 25 residential acres and 80 commercial acres. Including venture activity, Forestar has over 14,100 acres of entitled land, representing over 25,400 residential lots and almost 1,600 commercial acres.

Development Activity

     Forestar has 2,700 acres developed and under development owned directly or through ventures.

Investment Activity

     During first quarter 2009, Forestar did not acquire additional real estate. In addition, the company invested only $7.6 million in real estate development activity, compared with approximately $20.6 million in first quarter 2008. “Excluding our contributions to the resort at Cibolo Canyons, first quarter 2009 investment in development was down almost 70% compared with first quarter 2008,” added Mr. DeCosmo.

MINERAL RESOURCES

	1st Qtr.		1st Qtr.		4th Qtr.
Segment Earnings	2009		2008		2008
($ in Millions)	$	4.8	$	6.5	$	6.1

Mineral Activity

     Forestar owns 622,000 net acres of oil and gas mineral interests in Texas, Louisiana, Alabama and Georgia.

Mineral Activity
First Quarter 2009

	Revenues		Activity*
Royalties	$	3.5 million	Natural Gas Production (MMCF)		394.7
			Average Price / MCF	$	6.16
			Oil Production (Barrels)		26,200
			Average Price / Barrel	$	47.24
Other Lease Revenues	$	2.4 million	Acres Leased		6,116
			Average Bonus / Acre	$	347
Total Revenues	$	5.9 million

* Includes venture activity

     During first quarter 2009, our share of oil and gas production related to our royalty interests was about 26,200 barrels of oil and approximately 394.7 MMCF of natural gas. In addition, Forestar generated other lease revenues of $2.4 million principally related to the leasing of over 6,100 net mineral acres for $347 per acre.

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Minerals Activity

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

Q1 2009 Minerals Activity

	Available				Held by
State	for Lease*		Leased		Production		Total
Texas		124,000		101,000		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
		476,000		120,000		26,000		622,000

* Includes approximately 11,200 net acres subject to lease option.

FIBER RESOURCES

	1st Qtr.		1st Qtr.		4th Qtr.
Segment Earnings	2009		2008		2008
($ in Millions)	$	2.9	$	2.8	$	2.7

Fiber Sales Activity

     During first quarter 2009 Forestar generated approximately $3.7 million in revenues from the sale of about 0.3 million tons of fiber, the majority of which was sold to Temple-Inland Inc. at market prices.

Strategic Initiatives Update

     Forestar previously announced the following strategic initiatives to enhance shareholder value:

• Generate significant cash flow, principally from the sale of approximately 175,000 acres of HBU timberland

• Reduce debt by approximately $150 million, and

• Repurchase up to 20% of the company’s outstanding shares

     Debt reduction and share repurchases will be funded by proceeds from the asset sales described above.

     “We announced a definitive agreement with Hancock Timber Resource Group May 4, 2009, to sell approximately 75,000 acres of timberland in Georgia and Alabama for $120 million in a cash transaction. We are confident in our ability to successfully execute our strategic initiatives and this initial sale represents a significant first step, despite difficult market conditions. The transaction is expected to close in second quarter 2009, and we intend to use proceeds from this sale to reduce debt. We firmly believe that our strategic initiatives will enhance shareholder value,” said Jim DeCosmo, president and chief executive officer.

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     The Company will host a conference call on May 6, 2009 at 10:00 am EDT to discuss results of first 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 1-866-730-5762 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-857-350-1586. 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 58752126.

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 363,000 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 almost 17,000 acres, comprised of almost 30,000 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 sells wood fiber from its land primarily located in Georgia, and leases land for recreational uses. 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.

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

	First Quarter
	2009			2008
	(In thousands,
	Except per share)
Revenues
Real estate	$	18,787		$	28,443
Mineral resources		5,921			6,268
Fiber resources		4,369			2,512
Total revenues	$	29,077		$	37,223
Segment earnings
Real estate	$	542		$	3,543
Mineral resources		4,782			6,505
Fiber resources		2,909			2,840
Total segment earnings		8,233			12,888
Expenses not allocated to segments
General and administrative (a)		(7,619	)		(5,006	)
Share-based compensation		(1,706	)		(2,681	)
Interest expense		(5,166	)		(5,666	)
Other non-operating income		51			82
Income (loss) before taxes		(6,207	)		(383	)
Income tax benefit (expense)		2,315			145
Net loss attributable to Forestar Group Inc.	$	(3,892	)	$	(238	)
Earnings per share – Basic:
Net (loss) income	$	(0.11	)	$	(0.01	)
Average basic shares outstanding		35.7			35.4

Supplemental Financial Information

	First Quarter		First Quarter
($ In thousands)	2009		2008
Borrowings under credit facility	$	244,700	$	194,300
Other debt*		104,483		90,590
Total Debt	$	349,183	$	284,890

*	Consists principally of consolidated venture non-recourse debt.
(a)	First quarter 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.

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

	First Quarter
	2009		2008
Owned & Consolidated Ventures:
Entitled, developed and under development projects
Number of projects		54		54
Residential lots remaining		20,467		19,985
Commercial acres remaining		1,704		1,385
Undeveloped land and land in entitlement process
Number of projects		22		21
Acres in entitlement process		32,520		30,200
Acres undeveloped		307,093		320,749
Ventures accounted for using the equity method:
Ventures’ lot sales (first three months)
Lots sold		29		64
Revenue per lot sold	$	73,647	$	59,242
Ventures’ entitled, developed, and under development projects
Number of projects		21		21
Residential lots remaining		9,298		9,319
Commercial acres sold (first three months)		4		22
Revenue per acre sold	$	196,996	$	85,000
Commercial acres remaining		645		697
Ventures’ undeveloped land and land in entitlement process
Number of projects		2		2
Acres in entitlement process		1,080		870
Acres sold (first three months)		—		—
Revenue per acre sold		—		—
Acres undeveloped		5,641		6,127

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A summary of projects in the entitlement process^(a) at first 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 first 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
	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	%		—		21		—		—
Texas
Arrowhead Ranch	Hays		100	%		—		232		—		6
Caruth Lakes	Rockwall		100	%		245		404		—		—
Cibolo Canyons	Bexar		100	%		554		1,193		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	%		34		475		—		60
Maxwell Creek	Collin		100	%		650		361		10		—
Oak Creek Estates	Comal		100	%		9		639		13		—
The Colony	Bastrop		100	%		409		2,236		22		49
The Gables at North Hill	Collin		100	%		195		88		—		—
The Preserve at Pecan Creek	Denton		100	%		209		609		—		9
The Ridge at Ribelin Ranch	Travis		100	%		—		—		179		16
Westside at Buttercup Creek	Williamson		100	%		1,281		240		66		—
Other projects (7)	Various		100	%		1,544		25		197		23
Georgia
Towne West	Bartow		100	%		—		2,674		—		121
Other projects (14)	Various		100	%		—		2,836		—		705
Missouri and Utah
Other projects (2)	Various		100	%		400		364		—		—
						6,152		14,290		591		1,576
Projects in entities we consolidate
Texas
City Park	Harris		75	%		1,099		212		50		105
Lantana	Denton		55	% (e)		414		1,867		—		—
Light Farms	Collin		65	%		—		2,517		—		—
Stoney Creek	Dallas		90	%		59		695		—		—
Timber Creek	Collin		88	%		—		614		—		—
Other projects (5)	Various	Various				935		272		24		23
						2,507		6,177		74		128
Total owned and consolidated						8,659		20,467		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	%		265		115		—		15
Lantana	Denton	Various		(e)		1,427		43		14		75
Long Meadow Farms	Fort Bend		19	%		604		1,502		72		138
Southern Trails	Brazoria		40	%		326		736		—		—
Stonewall Estates	Bexar		25	%		180		201		—		—
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				294		230		—		15
Florida
Other projects (3)	Various	Various				473		372		—		—
Total in ventures						7,972		9,298		174		645
Combined Total						16,631		29,765		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.

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(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.
(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 first 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
Las Brisas	Williamson	Austin		49	%	Multi-Family	414 unit luxury apartment
Gulf Coast Apartments	Various	Various		2	%	Multi-Family	9 apartment communities
Harbor Lakes Golf Club	Hood	Dallas/Fort Worth		100	%	Golf Club	18-hole golf course and club
Presidio at Judge’s Hill	Travis	Austin		60	%	Condo	45 units

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

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