Israel Sees Sharpest Two-Month Drop in Home Prices in Eight Years as Annual Inflation Slows to 1.6%

Israel's Central Bureau of Statistics reported a 1% decline in home prices during April-May 2026 compared to March-April, marking the steepest two-month drop in about eight years. The last time such a sharp decrease occurred was between December 2017 and January 2018. On an annual basis, home prices fell by 2% compared to the same period last year. The downward trend in housing prices began in March 2025 and has mostly continued, except for two months with price increases.

The largest price drops were seen in the Tel Aviv district, where prices fell by 2.3%, and in Jerusalem, with a 1.8% decline. Haifa saw a 0.5% decrease, while prices in the Central and Southern districts remained stable. Year-over-year transaction data showed price declines of 3.2% in the Central district, 2.6% in Haifa, 2.5% in Tel Aviv, and 0.5% in the South. Conversely, prices rose by 1.4% in the North and 0.3% in Jerusalem.

New home prices specifically dropped 3.9% year-over-year and 0.1% over the two-month period. Notably, 37.5% of new home purchases were made under government-subsidized programs offering significant discounts.

In addition, the consumer price index for June 2026 remained unchanged from May, against expectations of a 0.1% decrease. Annual inflation slowed to 1.6% from 1.9% the previous month. Price increases were recorded in culture and entertainment (1.0%), housing (0.7%), health (0.6%), and food (0.4%). Significant price drops occurred in fresh fruits and vegetables (-5.2%), clothing and footwear (-2.7%), transportation (-0.7%), and furniture and household equipment (-0.5%).