Israel's Housing Market Faces Steep Decline in Completed Units

Israel's housing market is experiencing a significant downturn, with a sharp 13.7% decrease in completed housing units during the second quarter, according to the Central Bureau of Statistics (CBS). This decline, coupled with a nearly 10% drop in new construction starts, signals a potentially worsening situation.

The slowdown is attributed to factors including a shortage of workers, rising construction costs, and delays in obtaining building permits. Despite an increase in building permit approvals, with a 2% rise for approximately 83,340 units, the actual construction progress is lagging.

Annually, construction starts fell by 7% over the past year (July 2025 to June 2026), with net starts down 6.5% to about 70,320 units. The Central District and Tel Aviv led in new permits, while the Central District also saw the most completed units (25.5%).

Urban renewal projects, including TAMA 38 and "Pinui-Binui" (evacuate and build) initiatives, saw about 17,670 units begin construction, with Tel Aviv and the Central District being the primary locations. Tel Aviv-Yafo saw a 19.9% increase in new construction starts, while Jerusalem experienced a 30.1% decrease.

Despite the overall negative trends, the number of completed housing units nationwide saw a 7.9% increase over the past 12 months, reaching approximately 60,970 units. This marks the most encouraging statistic in the recent data. The average construction time for a building was 31.8 months, or 37.3 months when weighted by the number of units.