Abstract: Based on the structure of consumers in the real estate market, this paper constructs a theoretical mode that balances partially the property purchasers and developers and investigates the impact of interest rate fluctuation on the housing prices. The result shows that the impact of interest rate fluctuation on the housing prices depends on the structure of purchasers. When the number of purchasers who get loans from banks is larger than the critical point, the increase of interest rate causes the decrease of housing prices. The GMM estimation of the panel data of China’s 35 large and middle sized cities in 2000-2012 shows the actual interest rate fluctuation in a short term has a reverse relation with housing prices. Although the impact is weak, it verifies the conclusion of our theoretical analysis. Empirical tests also find out that other macroeconomic variables, including policies and world economy, have remarkable impacts on housing prices. Therefore, the interest rate policies should be implemented with other measurements in order to regulate and control the real estate market.