Israel's Housing Market Sees Sharp July Decline After Brief Recovery

Israel's housing market experienced a significant downturn in July, with a sharp decrease in apartment sales across both new and used markets, according to a report from the Ministry of Finance's chief economist. The overall number of apartments sold in July fell by 12% compared to June and 4% year-on-year, reaching levels not seen in decades. In the free market, excluding government-subsidized housing programs, 6,582 apartments were sold, a 13% drop from June and 9% from July of the previous year.

New apartment sales in the free market were particularly hard hit, plummeting by 22% from June and 5% year-on-year, with 1,858 units sold. Used apartment sales saw a 9% decrease from June and an 11% drop from July 2025, totaling 4,724 units. The inventory of unsold new apartments remained high at approximately 85,000 units, representing about 27 months of supply at the current sales pace.

Investor activity also continued to decline. Investors purchased 1,146 apartments in July, an 18% decrease from June and 4% year-on-year. They also sold 1,366 apartments, leading to a net reduction of 220 apartments in investor portfolios during the month, and a total decrease of about 8,700 apartments since October 2021.

The southern region of Israel showed particular weakness, with Beersheba experiencing a 74% drop in new apartment sales in the first seven months of the year compared to the same period in 2024. Netivot and Ofakim were also identified as weak markets. Contractors are increasingly offering financing incentives to stimulate sales, with 27% of free market transactions in July including such benefits, though this is still lower than the previous year.

Despite the July slump, a broader view of the past three months (May-July) indicates a more positive trend, with approximately 25,000 apartments sold, a 21% increase from the preceding three months. New apartment sales also rose by about 30% during this period. However, the report concludes that after signs of recovery in May and June, the July figures suggest that a stable recovery for the housing market is still a distant prospect.