As investors realized their error, rates would fall back. And markets would likely get a nudge from the Federal Reserve: We would set rates lower than the markets have built in, and in our various statements we would attempt to make clear our assessment of economic prospects.
Interest rates could then stay low for an extended period, the desired stock of housing would remain elevated, and housing investment would remain high as well. But that would be just what is required. Alternatively, business investment could snap back faster than expected.