The CFI and his private pilot student were initiating the stalls about 3000 feet agl and recovering by 1500 feet. During the third stall, the student pilot initiated recovery, and the airplane was descending straight ahead at about 1500 feet agl. The CFI took control of the airplane between 800 and 1000 feet, and determined the airplane was in a straight-ahead stall. The CFI was unable to recover the airplane to normal flight, and it impacted trees in a forested area. The airplane was substantially damaged and the student pilot was seriously injured.