Forestar Group (FOR 0.48%), a leading U.S. residential lot developer largely supplying homebuilders, released its fiscal third quarter results on July 22, 2025. The company reported GAAP revenue of $390.5 million, topping consensus GAAP estimates of $384.72 million, but delivered GAAP earnings per share (EPS) of $0.65, missing the $0.71 analyst expectation. Net income dropped to $32.9 million from $38.7 million in the same quarter last year. Revenue benefited from increased sales volumes and higher average lot prices, profits lagged due to margin pressure and increased expenses (GAAP). Forestar tightened its full-year lot delivery guidance to a range of 14,500 to 15,000 lots for FY2025, citing affordability challenges in the housing market and a slower pace of new home sales, marking a cautious overall assessment despite operational strengths.
| Metric | Q3 2025 | Q3 2025 Estimate | Q3 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.65 | $0.71 | $0.76 | (14.5%) |
| Revenue (GAAP) | $390.5 million | $384.72 million | $318.4 million | 23% |
| Net Income | $32.9 million | $38.7 million | (15%) | |
| Residential Lots Sold | 3,605 | 3,255 | 10.8% | |
| Average Sales Price per Lot | $106,600 | $94,000 | 13.4% |
Source: Forestar Group. Note: Analyst estimates provided by FactSet.
Forestar Group: Business Overview and Strategic Focus
Forestar Group is a real estate company specializing in the acquisition, development, and sale of residential lots to homebuilders across the United States. It operates in 64 markets spanning 23 states. Its business centers on supplying finished lots, typically for entry-level and first-move-up homes, which make up the largest and most active segments of the new home market.
The company's success hinges on several critical factors: its strategic partnership with D.R. Horton, disciplined land acquisition, a focus on short-duration, phased projects, and geographic diversification. Forestar's model is designed to maximize capital efficiency and spread risk by developing lots in locations with supportive housing demand trends. Close cost management and timely inventory turnover remain key to maintaining healthy margins.
Quarterly Highlights: Revenue Growth, Margins, and Market Shifts
Forestar sold 3,605 residential lots, up 10.7% from the 3,255 lots sold during Q3 FY2024. The company achieved an average lot sales price of $106,600, a 13.4% rise compared to the third quarter of fiscal 2024. The combination of higher volume and stronger pricing helped lift GAAP revenue above expectations.
Net income (GAAP) declined to $32.9 million—a 15.0% decrease compared to the third quarter of fiscal 2024. Cost of sales climbed 25.9% compared to the third quarter of fiscal 2024, outpacing revenue growth, while SG&A (GAAP) rose 32% year over year, mainly from investments in new markets and a larger workforce. Net income margin was 8.4%, down from 12.2% in the third quarter of fiscal 2024.
A significant operational focus remains the company’s ongoing relationship with D.R. Horton, the largest U.S. homebuilder and a major shareholder in Forestar. 530 lots were sold to customers other than D.R. Horton, but many of those were sold to lot bankers projected to later resell them to D.R. Horton. This relationship gives Forestar stable demand but also leads to customer concentration risk—where a large percentage of sales depend on a single partner.
The number of lots under contract to be sold increased 26% to 25,700 at the end of Q3 FY2025, representing about $2.3 billion in contracted revenue for upcoming periods. As of June 30, 2025, it held ownership or control of 102,300 lots, a 7.6% increase since September 2024 (Q4 FY2024), positioning the company to support volume growth should market demand strengthen. Regionally, the company noted some softness in Florida, but pointed to steady demand in markets such as Las Vegas and the Carolinas. Recent investments are concentrated in short-term, entitled developments to reduce exposure to broader market fluctuations.
Financial Outlook and Considerations for Investors
Forestar's management reduced its full-year lot delivery guidance to 14,500 to 15,000 lots for FY2025, down from the previous range of 15,000 to 15,500. Leadership attributed this change to ongoing home affordability issues and weaker consumer sentiment, both of which are currently slowing the pace of new home sales. Despite the reduction in delivery volume, the company maintained its annual revenue guidance of $1.50 to $1.55 billion for FY2025. Management did not provide additional margin or earnings outlook for the remainder of fiscal 2025 but previously characterized the margin environment as “relatively stable,” in the 21% to 23% range over the past three or four years, although actual results have shown some compression.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
