WHY IS HOUSING so expensive? Explanations have tended to fall into two camps. One emphasises a gummed-up supply side: a range of restrictions on land use and NIMBY campaigners have stymied housebuilding across the rich world. The other camp focuses on demand: a long-term fall in real interest rates has bid up the prices of all assets. Cheaper credit means more expensive housing. Yet even as interest rates rose across the rich world in the early 2020s, prices barely budged. Why? A range of recent papers suggests that the interaction between fixed supply and changes in demand explains the puzzle.