Israel's Real Estate Market Weakens Sharply in July, Driven by Lower Sales

Israel's real estate market experienced a significant downturn in July 2026, with the lowest number of transactions recorded since the early 2000s. A total of 7,692 apartments, both new and resale, were purchased, marking a 4% decrease compared to July 2025 and a sharper 12% drop from June 2026. When excluding government-subsidized housing, free-market sales fell by 9% year-over-year and 13% month-over-month to 6,582 units. This level of activity is comparable to July 2002, despite a roughly 60% increase in Israeli households since then.

The decline follows a brief period of growth in May and June, which the Ministry of Finance attributed to unusually low transaction levels in the prior year, influenced by Operation "With All Your Might" and preceding tensions with Iran. The July dip was also partly affected by the "Three Weeks" mourning period.

New apartment sales by contractors in the free market were particularly weak, totaling 1,858 units in July, a 5% decrease from July 2025 and a substantial 22% fall from June 2026. Sales were down in most regions, with the southern region seeing an 18% year-over-year decline in free-market new apartment sales. Since the start of the year, the south has experienced a 25% drop, the steepest nationally, with cities like Ofakim and Netivot showing significant decreases of 52% and 30% respectively.

Government subsidy programs, such as "Price for the Resident" and "Reduced Price," were the primary drivers of growth, with 1,110 units purchased under these schemes in July, a 46% increase year-over-year. This marks the third consecutive month exceeding 1,000 subsidized apartment purchases, a rare occurrence in recent years. Nationally, subsidized purchases rose 19% in the first seven months of 2026, contrasting with a mere 1% increase in free-market transactions.

Investors continued to retreat from the market, purchasing 1,146 apartments in July, down 4% from July 2025 and 18% from June. Investors sold more apartments than they bought, reducing their inventory by 220 units in July. Resale market transactions also weakened, with 4,724 apartments sold, an 11% decrease year-over-year.