Where is the most construction in Israel? Tel Aviv overtakes Jerusalem again in 2026

Knowing where most new construction is happening in Israel helps anticipate tomorrow’s supply of new homes. Data from the Central Bureau of Statistics over twelve months, from July 2025 to June 2026, analyzed by Merkaz HaNadlan, reveals a shift in leadership: Tel Aviv has overtaken Jerusalem, which had led the rankings for the past two years.

Here’s what these rankings mean for Israeli buyers as well as those purchasing from abroad.

City Rankings

Nationwide, the annual pace is down 7%, to around 76,040 units. More details in Q2 2026 housing starts.

Tel Aviv takes the lead again

With 7,611 housing starts and an increase of around 20%, Tel Aviv has once again become the country's top building city. A significant part of this activity comes from urban renewal: demolitions-reconstructions and upward extensions in the northern and central neighborhoods, as well as major projects on newly available land.

This momentum is part of a long-term development plan, with entire neighborhoods in preparation. We review them in Tel Aviv's major projects.

Jerusalem slows down

Jerusalem drops to 5,440 housing starts, down about 30%. The city still maintains a high volume, but the slowdown is clear after two years leading the rankings.

For a buyer, a slower construction pace may limit the choice of new developments in the medium term. Prices, however, remained stable in the first half of the year, according to our analysis of prices by city.

Cities on the Rise

Haifa (+93%)

Israel’s third-largest city nearly doubles its housing starts to 3,085. It combines affordable prices, strong employment, and the renewal of many neighborhoods. Its average price also increased by 4.7% in the first half of the year.

Kiryat Gat (+119%)

With 2,965 housing starts, this southern city makes a notable entry into the top rankings. It illustrates the development of new residential hubs south of the country’s center.

Yehud-Monosson (×3.5) and Herzliya (×2.7)

Yehud-Monosson jumps from around 460 to 1,674 housing starts. Herzliya reaches about 1,900, 2.7 times more than a year earlier, driven by urban renewal and new mixed-use neighborhoods.

Ashkelon (×2.6)

With 2,040 housing starts, Ashkelon returns to its usual pace after a slow year.

The Cities Falling Behind

- Beit Shemesh: Only 531 housing starts, about -70%.
- Ashdod: 1,434, about -54%.
- Ofakim: Around 1,660, -44.5%.

In these cities, the supply of new homes in the coming years could be more limited. In Ashdod, where prices rose by 6.1% in the first half of the year, this combination is worth watching closely.

How to use these figures

1. Many construction sites = plenty of options. In cities that are accelerating, competition among developers encourages negotiation, especially regarding payment terms.
2. Watch out for local oversupply. A surge of new deliveries in the same neighborhood can put pressure on rents and short-term resale values.
3. Few construction sites = future scarcity. In cities that are slowing down, existing projects may hold up better, but choices become limited.
4. Cross-check with prices and transport links. A project well connected to infrastructure remains the safest bet. Compare budgets with the city budget simulator.

Prices and Construction: A Comparative Analysis

Comparing the two rankings is insightful. Tel Aviv combines a sharp rise in average prices with strong construction activity, indicating sustained demand. Ashdod shows price increases while new construction starts are dropping, which may signal future scarcity. In contrast, Haifa and Ashkelon are rapidly accelerating their construction projects while prices remain accessible: an abundant supply that gives buyers more options. These observations are indicators to be checked on a project-by-project basis.

In any case, have a lawyer verify the developer's reliability and guarantees, structure your financing with a broker, and have an architect approve the plans. IsraelStart lists over 300 new projects throughout Israel and supports buyers both from abroad and those already in Israel. A personalized assessment, with no obligation, helps identify the right city.

Sources

- Merkaz HaNadlan, housing starts by city over 12 months, according to the CBS (09/17/2026).
- Central Bureau of Statistics (CBS).

Figures and decisions reported by the Israeli economic press, reworded and put into perspective by the IsraelStart editorial team. Indicative information, to be confirmed with a lawyer, a broker, and an expert before making any decision.