While the U.S. housing market is heavily subsidized by the federal government in normal times, it additionally serves as a major conduit of fiscal and monetary stimulus. For example, in response to the financial crisis, the Federal Reserve purchased $1.25 trillion in mortgage-backed securities in the first round of quantitative easing (QE). This unconventional action by the central bank was “taken to reduce the cost and increase the availability of credit for the purchase of houses,” (Board of Governors, 2008). Also during the crisis, Congress expanded the reach of long-standing programs that support the housing market – the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, and the Federal Housing Administration (FHA) – by raising loan limits and thus extending government-subsidized mortgage rates to a larger share of the population. A more recent example is a 2015 cut in the effective mortgage rate for FHA loans, with the objective of boosting first-time home buying and residential investment (The White House, Office of the Press Secretary, 2015). Despite increasing home buying is a key motivation for major stimulus policies, evidence on the responsiveness of home buying to interest rates is scarce. In general, identifying the effects of interest rates on economic activity is challenging because of the lack of cross-sectional variation and the endogeneity of interest rates to aggregate demand. We address these identification challenges by exploiting the 2015 rate cut for FHA loans. This change in FHA pricing provides unique, exogenous time series and cross-sectional variation that allows us to study the response of home buying to interest rates. In theory, drops in rates could increase demand for owner-occupied housing. In many housing market models, households prefer homeownership over renting for a variety of reasons, including the preferential tax treatment of housing services and agency issues in home maintenance that generates a wedge between the cost to rent and the cost to own (see, for example, Sommer and Sullivan, forthcoming).3 However, imperfect credit markets, sizeable transaction costs, and other frictions may prevent or delay homeownership for some households.