This affordability crisis has already pushed the US housing market into a real estate downturn. Home sales plummet. Homebuilders are canceling projects. And real estate companies are turning to layoffs.

While it’s clear that this ongoing housing downturn, spurred by the Fed’s inflation fight, will lead to a sharp drop in housing activity, its impact on house prices is less clear.

To better understand the evolution of house prices, Fortune looked at monthly home values ​​as measured by the Zillow Home Value Index (ZHVI). In total, we looked at data from 896 US regional real estate markets.

Let’s take a look at the data from Zillow.

Back in May, Moody’s Analytics Chief Economist Mark Zandi made a bold claim that the housing market would soon enter a house price correction. So far, he looks okay. Of the 896 major regional real estate markets tracked by Zillow, 117 markets saw home values ​​drop between May 2022 and August 2022.

The housing markets hardest hit by the house price correction fall into two groups.

The first group includes sparkling markets like Austin (down 7.4%), Boise (down 5.3%), Denver (down 4.3%), Las Vegas (down 2.3 %) and Phoenix (down 4.4%). These markets have seen deep-pocketed buyers from cities like San Jose and Seattle drive prices up far beyond what local incomes would have historically supported. Those booms died down once soaring mortgage rates sidelined even affluent out-of-town buyers. That’s why markets like Boise and Austin are now teetering on full-fledged real estate busts.

But the biggest price drops don’t happen in bubbling markets. Indeed, the biggest declines in home values ​​are in high-cost tech hubs like San Francisco (down 7.8%) and San Jose (down 10.6%). These markets have been hit with a double whammy. Not only are their high-end real estate markets more rate sensitive, but so are their tech sectors.

There’s no doubt about it: Soaring mortgage rates are putting downward pressure on house prices. However, the ongoing house price correction has done little so far to dampen the gains of the pandemic housing boom.

In fact, only Boise and Fairbanks, Alaska saw year-over-year declines in home values ​​between August 2021 and August 2022.

Zooming in even further, the 2022 price declines in markets like Boise look even smaller. At least compared to the gains we saw during the pandemic housing boom. After factoring in Boise’s 5.3% price drop this summer, home market values ​​are still up 48.6% since March 2020.

But we could still see more gains from the pandemic housing boom wiped out.

Research companies like Moody’s Analytics, Zonda, John Burns Real Estate Consulting, TD Bank and Zelman & Associates expect the house price correction to continue to spread across the country. The bubbly Sun Belt markets, in particular, remain the most at risk.

“The longer it lasts [mortgage] rates remain high, we think housing is going to continue to feel it and have this reset mode. And the affordability reset mechanism that needs to happen right now is activated [home] prices. And so there are a lot of markets across the country where we expect home prices to drop in double digits,” said Rick Palacios Jr., head of research at John Burns Real Estate Consulting. Fortune.

Want to stay up to date on the downturn in the US housing market? Follow me on Twitter at @NewsLambert.

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