After a long period of stagnation, war, and uncertainty, Israel’s construction sector signals a sharp return to activity. CBS data points to an exceptional surge in construction starts, precisely at a time when demand is still struggling to recover.
According to the report published on December 25th, between October 2024 and September 2025, the construction of approximately 81,000 apartments began in Israel – a 31.5% increase compared to the preceding 12 months. This is one of the strongest figures recorded in recent years, indicating that developers and contractors are returning to the field at an accelerated pace, attempting to close gaps that have formed since 2023.
Construction is concentrated mainly in the Tel Aviv and Central districts, but peripheral cities are also showing sharp jumps, some in the tens or even hundreds of percent, illustrating how project pipelines are being replenished with new apartments. The aggressive return to construction occurs against the backdrop of relative system stability, but also in the face of clear challenges. The pace of project completion remains moderate, and the average construction period has lengthened to about 32 months, meaning the market is flooded with apartments under construction, but far fewer ready-to-occupy units.
The implication is that, on one hand, there is no immediate collapse, but on the other hand, the pressure is postponed to the handover stage and the actual market encounter.
Transactions Stagnate, Prices Begin to React
Alongside the surge in construction starts, the demand side still struggles to recover. Another CBS report shows that in recent months there has been a decline in transaction volume, mainly in second-hand apartments, with many buyers continuing to sit on the fence.
High interest rates, economic uncertainty, and expectations of further price declines reinforce the waiting trend, both among home upgraders and investors. According to CBS data, the number of apartments sold is about 10% lower than in previous months and about 12% lower than in the same period last year – a figure illustrating continued market stagnation.
This stagnation meets a growing inventory: The number of new apartments remaining for sale has surpassed 83,000 units, with supply enough for nearly 29 months of sales at the current pace. Meanwhile, the Consumer Price Index for November indicates a monthly decrease of 0.5% in apartment prices, and a cumulative decline of about 2% since the beginning of the year.
At this stage, these are moderate declines, but they reflect a clear change in direction. If the high construction pace continues and demand does not recover, pressure is expected to gradually shift from silent promotions to prices themselves – primarily in the new apartment market and in areas with abundant supply.