Buyers cancelling deals yet building starts still growing in south

Senior deputy chief economist Galit Ban Naim highlights a paradox in the southern district housing market: 669 purchase deals signed between 2022-2025 have been cancelled, yet building starts continue to grow. The cancellations add to a stock of 10,788 unsold new homes, bringing the total to 11,457. Ban Naim questions how many building starts were for homes whose deals were later cancelled, and what this means for bank financing.

Senior deputy chief economist in the Ministry of Finance Galit Ban Naim has spotlighted a paradox in the southern district housing market. Based on Israel Tax Authority data, 669 purchase deals signed between 2022 and 2025 have been cancelled, as of the end of the second quarter of 2026. According to Central Bureau of Statistics figures, there were 10,788 unsold new homes in the district at that time. Adding the cancelled deals brings the total unsold stock to 11,457, 6% higher than the official figure, which does not count cancellations. Ban Naim notes the surprising continued growth in building starts despite declining sales and rising cancellations. For comparison, at end-Q1 2022, before the Bank of Israel raised interest rates, the district had a deficit of about 1,200 homes — building starts were lower than sales. By end-Q2 2026, the situation reversed to a surplus of some 11,000 building starts over sales. Ban Naim raises the question of how many building starts were for homes that were sold and later cancelled, estimating a large proportion of the 669 cancellations are involved, based on contractor-declared handover dates. She further questions the significance of cancellations for bank financing of projects.