Israel Sees 41% Surge in Canceled Home Purchases Amid Market Shifts

The Israeli housing market is experiencing a significant rise in canceled home purchase agreements, according to the latest analysis by the Treasury's Chief Economist. Between January and August 2026, 1,821 transactions were canceled, marking a 41% increase from the 1,294 cancellations recorded in January 2026. Most cancellations occurred in 2024, a year characterized by widespread developer financing promotions before Bank of Israel restrictions took effect. In 2021, a record year for home purchases, cancellations were only about 0.5%, but by 2024 this rate rose to 2.3%. Since only 40% of these canceled deals involved homes already delivered, further cancellations are expected.

Geographically, the highest cancellation rates were in Beersheba and Tiberias, followed by Tel Aviv and Jerusalem, which also showed notably high cancellation levels. In June 2026, 8,757 homes were sold, a 50% increase compared to June 2025, largely due to a market slowdown during the "With a Lion" military operation that halted activity for nearly 12 days. Compared to June 2024, sales rose moderately by about 7%. However, this increase was driven mainly by second-hand and subsidized homes, with new developer sales remaining weak.

In June 2026, developers sold 2,386 homes in the free market, a 66% rise from June 2025 but an 18% decline from June 2024. Tel Aviv was the only area where developer sales exceeded those of June 2024, with about 40% of sales concentrated in two projects. Since November 2024, the Treasury has monitored developer financing promotions, known as 20/80 deals, which were restricted by the Bank of Israel in April 2025 but remain common, especially in central Israel where prices are higher. In June 2026, 36% of purchases in the central region used such financing, similar to the previous month but higher than the 30% seen in late 2025. Netanya also showed a high rate of 32% for these promotions.

Approximately 57% of developer sales in June 2026 were "off-plan" purchases, consistent with the previous month but down from 67% in March 2025 before the financing restrictions. Tel Aviv stood out with 84% of developer sales being off-plan, with an average sales cycle of 5.5 years. The second-hand market remains weak, particularly in Haifa, the only region where second-hand sales declined compared to June 2024, prior to the military operation.