Global interest rates, not Fed policy, drive housing market fluctuations.
The study looked at the causes of the housing bubble and found that long-term interest rates, influenced by global factors, have a significant impact on housing variables. The thirty-year mortgage rate was found to be more important than the short-term fed funds rate in predicting housing trends. Over time, the influence of the fed funds rate on housing has decreased, while the mortgage rate remains highly significant. This suggests that individual central banks have less control over long-term interest rates.