Israel’s new-home sales jumped nearly 25% from a year earlier, yet developers are still carrying almost 86,000 unsold homes. Behind the impressive increase, the latest figures show a housing market whose recovery remains uneven.

About 10,110 new homes were sold between June and August, according to the Central Bureau of Statistics. At the end of August, 85,680 remained for sale, equivalent to 26.7 months of supply at the sales pace used by the bureau.

Calcalist’s analysis points to two major reasons for the jump: comparison with last year’s war-disrupted market and an unusually large number of purchases through government-subsidized housing programs.

Only about 2,000 new homes were sold in June last year, when Israel was fighting Iran. That depressed starting point makes this year’s increase look stronger, even without a dramatic improvement in underlying demand.

Meanwhile, roughly 3,600 purchases during the three-month period came through subsidized programs, accounting for more than a third of new-home sales. Calcalist reported that discounts of around NIS 500,000 help drive demand for those properties. Excluding subsidized transactions, sales rose by approximately 13%, roughly half the headline growth rate.

The comparison with the preceding three months offers another reason for caution. After adjusting for seasonal patterns, new-home sales fell 5.5% from March–May, while transactions across new and secondhand homes declined 2.9%. The bureau’s longer-term trend figures nevertheless show new-home sales gradually recovering since the beginning of the year.

The inventory figure also covers homes at different stages of development. The bureau counts permitted housing intended for sale for which no sale has been reported, including units whose construction has yet to begin. The backlog therefore extends beyond completed apartments available for immediate occupancy.

Newer price data add to the evidence of a subdued market. Israel’s home-price index fell 0.6% in July–August compared with June–July and was down 1.8% from a year earlier. Prices of new homes excluding subsidized transactions fell 0.8% over the same overlapping two-month comparison.

Developers are also facing rising construction expenses. Residential building costs increased 3.6% over the past year, with construction wages up 5.3%, putting pressure on builders as selling prices soften.

The summer sales figures predate the Bank of Israel’s September decision to lower its benchmark interest rate to 3.25%. Future releases will help show whether the latest reduction supports stronger demand. The central bank’s next rate decision is scheduled for Wednesday.