Israeli Housing Market Cools in July After Record June Performance

The recovery in the Israeli housing market observed in June experienced a slight slowdown in July, with 7,600 apartments sold compared to 8,810 in June—a decrease of approximately 13.7%. June was the strongest month for sales since the beginning of the year, but the market did not replicate this achievement in July.

The decline was particularly noticeable in the new apartment market. In July, approximately 2,930 new apartments were sold, compared to about 3,670 in June—a drop of about 20%. This figure includes apartments sold on the free market as well as those sold under government-subsidized programs. When separating these figures, it turns out that the blow to contractors' free-market sales was even greater. In July, 37.9% of new apartment sales were subsidized, amounting to about 1,110 apartments. Excluding these transactions, free-market new apartment sales stood at about 1,820—a 26% drop within a single month compared to 2,460 free-market apartments sold in June.

The second-hand market also saw a decline, though a milder one: about 4,670 second-hand apartments were sold in July, compared to roughly 5,135 in June—a decrease of about 9%.

Three-Month Trends and Subsidized Sales

However, looking at the past three months paints a more positive picture. Between May and July, 25,160 apartments were sold—an increase of 20.8% compared to the previous three-month period of February–April. The recovery during this period was particularly strong in the new apartment market, where 10,470 new apartments were sold—a 30.4% jump compared to February–April. In the second-hand sector, 14,690 apartments were sold, reflecting a 14.8% increase.

Compared to the corresponding period last year, the number of transactions between May and July was 14.6% higher. New apartment sales surged by 42%, while second-hand apartment sales rose by only 0.8%.

Geographic Disparities and Contractor Inventories

Contractor sales recoveries varied across cities. Tel Aviv-Yafo led in new apartment sales between May and July with 1,157 transactions, up 22.6% from the previous three months. Ashdod and Kiryat Gat saw particularly sharp surges of 270% and 123% respectively, while sales in Haifa rose by 58%. Conversely, Jerusalem saw a 6.3% drop in new apartment sales.

Despite rising sales, contractor inventories remain high. At the end of July, the inventory stood at approximately 84,990 apartments, representing 26.9 months of supply—almost unchanged from June's 84,820 apartments. Inventories are concentrated mainly in the Tel Aviv and Central districts, which together hold over half of the unsold apartments: about 26,170 apartments in the Tel Aviv district and 20,990 in the Central district. At the municipal level, Jerusalem leads with about 10,100 unsold new apartments, followed by Tel Aviv-Yafo with approximately 9,720 apartments.