Home Sales Fall to Two-Year Low in Israel

Home sales fall to the lowest level in two years: In October 2025, 4,518 apartments were purchased, including those under government subsidy—the lowest monthly volume since November 2023. According to the Ministry of Finance Chief Economist’s review published today (Wednesday), this represents a 12% drop compared to October last year (despite fewer working days this October) and a 35% decline compared to the previous month.

By Dror Nir Castel, Nadlan Center

Home sales decline further when excluding discounted housing: transactions in the open market totaled 3,639 apartments in October, a 21% decrease year-on-year and a 40% decrease from September. Similar to recent months, the sharpest falls were recorded in new apartments sold on the open market, although secondhand transactions also accelerated downward. This level is among the lowest since the early 2000s, surpassed only by October 2023.

Government-subsidized sales accounted for nearly half (46%) of all new apartment transactions in October, the highest share since October 2019.

Contractor sales reflect the same pattern: total October sales reached 1,917 apartments, including subsidized units, marking a 14% decline from last year and a 28.7% drop from September. Excluding subsidized units, contractors sold only 1,038 apartments on the open market—the lowest level since October 2023 and even lower than November 2023, immediately after the outbreak of the Iron Swords War. This represents a 40% decline from last year and 42% from the previous month.

The South saw the sharpest declines, with Be’er Sheva down 57% and Ashkelon down 44%. In contrast, Netivot remained stable, partly due to the prevalence of financing incentives.

The share of new apartments purchased “on paper” stood at 60% in October, two points higher than in September but two points lower than in October 2024. Over the first ten months of the year, Tel Aviv recorded an 11-point drop in new construction purchases, though the rate remains above the national average (65% vs. 62%). The Ministry attributes this sharp decline, in part, to the very high inventory of unsold new apartments in Tel Aviv.

Financing incentives also reflect the broader trend: in October, such incentives were reported in 26% of transactions in the five regions monitored, returning to August levels after spiking to 30% in September. These levels remain significantly below the peak in March 2025, when incentives accounted for half of contractor sales in the free market. This follows Bank of Israel restrictions introduced in April 2025.

Contractors’ actual net cash flow from new apartment sales remained low at around 400 million shekels, similar to September, and more than 50% lower than in September–October 2024. A notable rise in financing incentives occurred in Tel Aviv, where they reached 39% of free-market sales—nine points above September and slightly above March levels. However, the number of apartments sold in Tel Aviv’s free market in October was less than half the March volume.

Secondhand apartment sales also continued to fall: just 2,601 units were sold in October—the lowest figure since October 2023. This represents a 10% decline year-on-year and 39% compared to September.

Home sales fall similarly among investors: only 759 apartments were purchased— the lowest level since November 2023. This reflects a 9% annual drop and a 36% monthly drop. Investor sales also fell to 768 units, down 14% from October 2024 and 38% from the prior month.

First-time buyers were also impacted: they purchased 2,741 apartments in October, including subsidized units—a 4% yearly decline and a 30% monthly decline. Excluding subsidized transactions, first-time buyers in the free market purchased 1,862 apartments—a sharp 21% drop compared to last year and 38% compared to September. The Central Region continues to show particularly sharp declines.

Apartment sales decline significantly among “housing upgraders” as well. After a brief rebound in August, purchases fell again in the past two months. October saw just 1,018 upgrader purchases, a 29% decline from October 2024 and a 44.4% drop from September.