Israel's May Home Sales Rise Slightly but Market Remains Sluggish

Despite a modest increase in real estate transactions in May 2026, the Israeli housing market remains far from the rapid price growth seen before April 2022, when the Bank of Israel began raising interest rates. Data from the Central Bureau of Statistics and the Treasury's chief economist show that while May saw a double-digit rise in sales compared to April and May of the previous year, this improvement is relative to a period of high interest rates, and overall market activity is still subdued.

From January to May 2026, about 21,500 second-hand homes were sold, projecting to roughly 51,000 annually, similar to 2023-2025 levels but well below the 71,000 sold in 2022 and 95,000 in 2021 when interest rates were near zero. In May alone, approximately 8,400 new and second-hand homes were sold, a 23% increase from May 2025, which was historically weak, and a 63% jump from April 2026, partly due to fewer working days in April because of Passover.

Of the new homes sold in May, 1,201 were purchased under government-subsidized programs like "Price for Residents," while 7,045 were sold at market prices, marking a 17% increase year-over-year. However, May’s sales volume still ranks in the bottom third compared to May months since the early 2000s. The surge in transactions mainly stems from new home sales, which rose 51% year-over-year and 72% from April, with 2,412 sold on the open market. Real estate investment trusts (REITs) contributed by buying 100 units with financing incentives.

In the Tel Aviv area, transactions jumped from 150 in May 2025 to 481 in May 2026, but 44% of these were concentrated in two projects, indicating localized boosts rather than a broad market recovery. One major project by Gindi Holdings at Sde Dov accounted for about 700 sales, mostly contracts signed last year but only recorded in 2026 after receiving building permits, making much of the sales increase technical rather than new demand.

Another factor driving sales is the increased use of financing benefits allowing buyers to pay only 10-20% upfront and the rest upon receiving keys. This practice, restricted by the Bank of Israel in March 2025 due to risk concerns, has seen a resurgence, especially in Jerusalem (43% of May deals) and the central region (37%). Meanwhile, second-hand home sales showed a modest recovery with 4,633 units sold in May 2026, up 7% year-over-year, but about 84,000 homes remain unsold nationwide, close to a record high from January 2026. Over half of these unsold homes are in the central and Tel Aviv districts, with 9,800 in Tel Aviv city and over 10,000 in Jerusalem.