This paper examines the sources and consequences of fluctuations in the housing market using a dynamic stochastic general equilibrium (DSGE) model. The authors find that the upward trend in real housing prices over the past 40 years can be attributed to slow technological progress in the housing sector. Over the business cycle, housing demand and supply shocks explain about one-quarter each of the volatility in housing investment and prices, while monetary factors explain about 20 percent. The paper also highlights that housing market spillovers are significant, concentrated on consumption rather than business investment, and have become more important over time. The estimated model successfully replicates key features of the data, including the procyclical nature of housing prices and investment, and their sensitivity to monetary shocks. The authors conclude that the housing market's interactions with the broader economy are complex and multifaceted, with housing demand shocks playing a crucial role in driving the housing market dynamics.This paper examines the sources and consequences of fluctuations in the housing market using a dynamic stochastic general equilibrium (DSGE) model. The authors find that the upward trend in real housing prices over the past 40 years can be attributed to slow technological progress in the housing sector. Over the business cycle, housing demand and supply shocks explain about one-quarter each of the volatility in housing investment and prices, while monetary factors explain about 20 percent. The paper also highlights that housing market spillovers are significant, concentrated on consumption rather than business investment, and have become more important over time. The estimated model successfully replicates key features of the data, including the procyclical nature of housing prices and investment, and their sensitivity to monetary shocks. The authors conclude that the housing market's interactions with the broader economy are complex and multifaceted, with housing demand shocks playing a crucial role in driving the housing market dynamics.