We study of the impact of local transaction volumes on housing market outcomes. We argue that higher transaction volumes increase prices by making valuations more accurate. We link prices and valuation accuracy in a simple theoretical framework that shows the impact of more precise valuations on reservation prices and bargaining positions of buyers and sellers. For identification, we exploit a plausibly exogenous variation in the number of transactions coming from the fact that houses with higher estimated nominal capital gains since purchase are more likely to be transacted. Our results show that when transaction numbers double, prices increase and valuation errors decrease, both by around 6%. We also show that sellers are likely to benefit more from higher transaction volumes as it increases their bargaining power.