Forestar has recently released its 10-Q report. Forestar Group Inc. develops residential lots in the United States, buying land and building infrastructure for single-family communities before selling finished lots to homebuilders. The company was incorporated in 2005, is based in Arlington, Texas, and operates as a majority-owned subsidiary of D.R. Horton.
In Item 2, Forestar said its core business remains its real estate segment, which generated substantially all of revenue. As of June 30, 2026, D.R. Horton owned about 62% of Forestar’s common stock, down from 75% immediately after the 2017 merger that made Forestar a subsidiary. Forestar said it operated in 65 markets across 24 states and held a lot position of 91,700 residential lots, including about 62,200 owned lots and 29,500 controlled through purchase contracts. Of the owned lots, about 23,500 were under contract to be sold for about $2.3 billion.
For the nine months ended June 30, 2026, Forestar sold 8,541 lots at an average price of $113,000, compared with 9,349 lots at $104,500 a year earlier. Total revenues rose 6% to $1.054 billion from $991.9 million, helped by tract sales and other revenues, which increased to $90.4 million from $14.6 million. Residential lot sales revenue fell to $963.9 million from $977.3 million, as lower volume outweighed the higher average selling price.
Pre-tax income increased to $113.5 million from $106.2 million, while pre-tax operating margin edged up to 10.8% from 10.7%. Net income attributable to Forestar was $83.5 million, up from $81.0 million, and diluted earnings per share rose to $1.63 from $1.59.
For the third quarter, revenue increased 4% to $407.0 million from $390.5 million. Forestar sold 3,659 lots in the quarter, up from 3,605, and the average sales price per lot rose to $108,800 from $106,600. Income before income taxes was $48.7 million, compared with $43.6 million a year earlier.
Within the revenue breakdown, development-project lot sales were $396.0 million in the quarter and $956.5 million for the nine months. Lot banking project sales were $2.0 million in the quarter and $8.0 million year to date. Tract sales and other revenue totaled $9.6 million in the quarter and $90.4 million for the nine months, including 709 tract acres sold for $61.7 million to customers other than D.R. Horton and 56 tract acres sold to D.R. Horton for $11.5 million.
Forestar said cost of sales rose to $322.9 million in the quarter from $310.8 million, and to $835.0 million for the nine months from $778.0 million, mainly because of higher revenue. SG&A expense was $38.3 million in the quarter and $112.6 million for the nine months, compared with $37.4 million and $111.8 million a year earlier. SG&A represented 9.4% of revenue in the quarter and 10.7% for the nine months, down from 9.6% and 11.3%.
Interest incurred was $12.4 million in the quarter and $37.4 million for the nine months, compared with $13.4 million and $32.3 million a year earlier. Forestar recorded no impairment charges in either period. Land purchase contract deposit and pre-acquisition cost write-offs were $0.8 million in the quarter and $8.0 million for the nine months, versus $1.9 million and $3.9 million a year earlier.
Income tax expense was $12.7 million in the quarter and $29.8 million for the nine months, with an effective tax rate of 26.1% and 26.3%, compared with 24.5% and 23.7% in the prior-year periods. At June 30, 2026, Forestar reported net deferred tax liabilities of $92.8 million, up from $86.2 million at September 30, 2025.
Forestar said new-home demand remained pressured by affordability constraints and cautious consumer sentiment, while municipalities continued to slow some development timelines. The company said it remained focused on affordable price points, disciplined land investment, and managing lot pricing and sales pace to match local demand. Following these announcements, the company's shares moved 1.41%, and are now trading at a price of $27.40. If you want to know more, read the company's complete 10-Q report here.
