The short answer is that there is no direct correlation between interest rates and housing prices. Think about it. Since the financial crash in 2007, interest rates have collapsed---but so have housing prices. Here's a chart of 30 year mortgage rates collapsing.
Here's a chart of housing prices (the Case-Shiller Index) for the same period.
Here is complete irrefutable evidence that there is no direct correlation between interest rates and housing prices. What is key is the interest rate relative to price inflation. If the fixed 30 year mortgage rate climbs from its current level of 3.35% to, say, 7%, but the Fed is pumping money in that will cause housing prices to climb by 10%, then it remains profitable for house buyers to buy houses and show a profit. It is only when interest rates are pushed above the current housing price growth that the money flowing into the housing sector starts to slow and eventually push prices lower. But as long as the money is flowing and keeping the Fed keeps the interest rate below the climb in housing prices, the boom will continue.
Here's a chart of 30-year fixed mortgages during the boom period. There was a general uptrend.
Here's what happen to housing prices during that period. Housing prices climbed while interest rates climbed, and actually only slowed the climb, when interest rates started to decline.
Bottom line: There is no direct correlation between housing prices and interest rates. It is very dangerous to look at the absolute interest rate to determine if housing prices are going to go up or down. You need to look at the interest rate on relative terms. As long as the Fed is pumping money to the degree that housing prices will climb higher than a climb in interest rates, the climb in housing prices will continue. Only when rates are pushed higher than the climb in housing prices will housing prices start to slow. Given the amount of money Bernanke is printing, we are nowhere near a period where interest rates will exceed the climb in housing prices. In fact, we are going in the opposite direction, the spread between mortgage rates and the climb in housing prices is expanding.