Housing Prices Drop Sharply Led by Tel Aviv Region as Inflation Falls to 1.6%

Israel's housing market experienced a significant price decline between April and May 2026, with the Central Bureau of Statistics reporting a 1% overall drop in housing prices. The Tel Aviv district led this trend with a 2.3% decrease, followed by Jerusalem with a 1.8% decline. This marks a continuation of a previous 0.4% drop and results in a 2% annual decrease in housing prices compared to the same period last year. New home prices fell slightly by 0.1%, while regional variations showed mixed results, including minor increases in the North and Haifa.

Simultaneously, the Consumer Price Index (CPI) for June 2026 remained unchanged from May, bringing annual inflation down to 1.6%, the lowest in five years and within the Bank of Israel's target range of 1% to 3%. Analysts had anticipated a slight 0.1% decrease. Notable price drops were seen in fresh fruits and vegetables (5.2%), clothing and footwear (2.7%), transportation (0.7%), and home furnishings (0.5%). Conversely, prices rose in culture and entertainment (1.0%), housing (0.7%), healthcare (0.6%), and food (0.4%).

Rental prices increased, with lease renewals up 2.6% and new tenant rents rising 6.6%. The data reflects ongoing shifts in Israel's housing and consumer markets, highlighting regional disparities and sector-specific inflation trends. The Central Bureau of Statistics will continue monitoring these developments to inform economic policy and market expectations.