Israel Home Prices Remain Lower Than a Year Ago

Israel's housing market remains cheaper than a year ago, but the latest data no longer show an uninterrupted decline. Home prices in June–July 2026 were 1.2% below their year-earlier level while rising 0.2% from May–June. New homes were 0.8% cheaper year on year, while almost 85,000 newly built dwellings remain unsold. The market is now being pulled in opposite directions by heavy developer inventory and improving financing conditions.

Prices rise for a second consecutive period

Prices in transactions completed in June–July increased 0.2% compared with May–June. That followed a 0.1% rise in the previous two-month period.

The annual comparison remains negative. The nationwide index was 1.2% below its June–July 2025 level.

Central District recorded the largest annual decline at 3.2%. Prices fell 2.4% in Haifa District, 0.9% in Tel Aviv and 0.6% in Southern District. Jerusalem was 1.1% higher than a year earlier and Northern District gained 1%.

The latest short-term figures look different. Tel Aviv rose 0.7% from May–June, Central District gained 0.3% and the south increased 0.1%. Jerusalem fell 0.4%, Haifa 0.3% and the north 0.1%.

New-home prices increased 0.5% in the latest period but remained 0.8% below their year-earlier level. Excluding government-subsidised transactions, the short-term increase was 0.4%. Subsidised transactions accounted for 41.2% of new-home purchases in the latest measurement, according to data released by Israel's Central Bureau of Statistics on Sept. 15.

The market therefore remains in annual decline, but prices are no longer falling consistently from one two-month period to the next.

Jerusalem mayor expects prices to move lower

Jerusalem Mayor Moshe Lion has advised prospective buyers not to rush.

In an interview with Srugim, Lion said he believes buyers may benefit from waiting a year or two because prices could decline further. He argued that developers still have enough margin to make additional concessions.

Lion did not predict a housing crash. He described his expectation as further declines and price moderation. It is his market assessment rather than an official forecast from the Bank of Israel or the Central Bureau of Statistics.

JFeed published his comments on Sept. 15 before the latest CBS housing index was released that evening. Its article therefore used the previous reading, which showed prices down 1.5% year on year and up 0.1% in the latest two-month comparison. The newer data narrowed the annual decline to 1.2% and recorded another small short-term increase.

Almost 85,000 new homes remain unsold

The clearest source of pressure on sellers remains the amount of housing available from developers.

About 84,990 new homes remained for sale at the end of July. At the prevailing rate of sales, the inventory was equivalent to roughly 26.9 months of supply.

Around 25,160 homes changed hands between May and July, 20.8% more than in the previous three-month period and 14.6% more than a year earlier.

About 10,470 of those transactions involved new homes. New-home sales increased 30.4% from the preceding three months and 42% year on year. However, 33.7% were sold through government-subsidised programmes.

Existing-home transactions totalled around 14,690, up 14.8% from the previous three-month period but only 0.8% from a year earlier.

July itself was weaker than June, with about 7,600 transactions. Despite the three-month improvement, developers have made little progress in reducing the total stock of unsold housing. More than half of that inventory is concentrated in Tel Aviv and Central districts.

That concentration matters because bargaining conditions can differ substantially between cities and individual projects.

Discounts do not always appear in the price index

Large developer inventories do not necessarily translate immediately into equivalent cuts in official selling prices.

Instead of reducing the contract price, a builder can offer deferred payments, financing assistance, upgrades or help with other transaction costs.

The economic cost to the buyer falls even though the recorded price changes much less.

Government programmes also affect the composition of new-home sales. Roughly one-third of new units sold in May–July were subsidised, while subsidised transactions accounted for more than 40% of purchases in the latest new-home price measurement.

An increase in new-home sales should therefore not automatically be interpreted as an equivalent recovery in unsubsidised demand at current market prices.

Existing homes weakened in the second quarter

A new quarterly CBS index provides a separate measure of the resale market.

Existing-home prices fell 1.2% in the second quarter from the first.

Jerusalem recorded the largest quarterly decline at 2.9%, followed by Tel Aviv at 2% and Central District at 1.1%.

Prices edged higher in Southern, Northern and Haifa districts.

The separate index is useful because the resale market is less directly affected by government-subsidised projects and developer financing incentives.

The average transaction value rose to NIS 2.435 million

A different official measure moved in the opposite direction from the housing index.

The average free-market dwelling sold in Israel during the second quarter cost about NIS 2.435 million. That was 3.7% higher than in the first quarter and 7.9% above the second quarter of 2025.

Tel Aviv District recorded the highest district average at approximately NIS 3.577 million, while Northern District was the lowest at around NIS 1.52 million.

Among major cities, Tel Aviv was the most expensive, with an average transaction price of about NIS 4.554 million. Herzliya stood at roughly NIS 3.578 million, Ramat Gan at NIS 3.07 million and Jerusalem at NIS 3.059 million.

The rise in the average does not contradict the falling quality-adjusted index. A simple average depends heavily on the mix of properties sold. More high-value transactions can lift the average even when comparable homes are becoming cheaper.

Bank of Israel rate falls to 3.25%

Financing conditions are now supporting the demand side of the market.

The Bank of Israel cut its policy rate by 0.25 percentage points to 3.25% on Sept. 1.

The central bank said the inventory of unsold housing remained high while transaction volumes increased moderately in May and June, mainly in new homes.

Seasonally adjusted mortgage borrowing reached around NIS 10 billion in July.

Rental inflation also moderated. Renewed leases were 2.6% more expensive than a year earlier, while contracts involving a change of tenant rose 4.7%, down from 6.6% in June.

Lower rates gradually reduce financing costs for households and developers and work against some of the downward pressure created by large inventories.

The affordability problem remains much larger

A modest annual decline does little to reverse the increase accumulated during the previous two decades.

Research published by the Shoresh Institution in April 2026 found that Israeli home prices increased by roughly 130% between 2000 and 2022 while net household income rose only about 45%.

The study also identifies structural problems in the composition of housing supply. Too few small homes are being built for a growing population of smaller households, while more than one-third of households now depend on the rental market. Housing costs exceed 30% of disposable household income for a substantial share of the population.

A decline of one or two percentage points therefore does little on its own to restore the affordability lost during the long housing boom.

Unsold inventory is the key number to watch

The next stage of the market will depend heavily on whether developers can reduce their inventories.

Almost 85,000 unsold homes and close to 27 months of supply give buyers more choice and potentially greater bargaining power, particularly in Tel Aviv and Central districts.

At the same time, sales improved over the May–July period, the policy rate has fallen to 3.25%, and the latest two price readings have been slightly positive.

The market therefore cannot yet be described convincingly as either a renewed boom or a continuing collapse.

As experts at International Investment report, the stock of almost 85,000 unsold homes remains the strongest source of downward pressure, but it does not guarantee further price declines. New-home sales have recovered, borrowing costs are falling and the latest short-term price readings are positive. Conditions are likely to remain most favourable to buyers in areas where several projects compete for the same demand. If inventory remains near current levels while unsubsidised sales weaken, developers will have stronger incentives to offer discounts or better financing terms.

FAQ

Are Israeli home prices falling?

On an annual basis, yes. Prices in June–July 2026 were 1.2% lower than a year earlier. They nevertheless increased 0.2% from the previous two-month period.

How much have new-home prices fallen?

New-home prices were 0.8% below their year-earlier level, although they increased 0.5% from the previous period.

Where are prices falling fastest?

Central District recorded the largest annual decline at 3.2%. Haifa fell 2.4% and Tel Aviv 0.9%.

What is happening to home prices in Jerusalem?

Jerusalem prices fell 0.4% from the previous two-month period but remained 1.1% higher than a year earlier.

How many new homes remain unsold?

About 84,990 units remained for sale at the end of July, equivalent to roughly 26.9 months of supply.

Are housing transactions recovering?

Around 25,160 homes were sold in May–July, 20.8% more than during the preceding three months. Sales nevertheless declined in July compared with June.

Why is the average transaction price rising while the index falls?

The average depends on the type and location of properties sold. A larger share of expensive transactions can raise the average, while the quality-adjusted index can still show lower prices for comparable homes.

What is the Bank of Israel policy rate?

The rate has been 3.25% since Sept. 1, 2026.

Will Israeli home prices continue to fall?

There is no official forecast guaranteeing further declines. Moshe Lion expects prices to move lower, while current market data show a combination of large inventory, recovering sales, lower interest rates and modest recent price increases.