We study sources and consequences of fluctuations in the US housing market. Slow technological progress in the housing sector explains the upward trend in real housing prices of the last 40 years. Over the business cycle, housing demand and housing technology shocks explain one-quarter each of the volatility of housing investment and housing prices. Monetary factors explain less than 20 percent, but have played a bigger role in the housing cycle at the turn of the century. We show that the housing market spillovers are nonnegligible, concentrated on consumption rather than business investment, and have become more important over time. (JEL E23, E32, E44, O33, R31)
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