Major housing correction ahead?

The over-the-top housing market has been over for the last few months. New data suggests the start of a different type of market. US homes prices fell by 1.1% between July and August, according to the Case-Shiller index. That’s the largest monthly decline since the housing crash hit of 2012. The Zillow Home Value Index doesn’t show an outright decline, but home prices have been flat in recent months after a couple of years of strong price appreciation. Experts are becoming increasingly worried that we’re heading for a major housing correction. A modest decline may be benign, perhaps a welcome, given how expensive housing has gotten. But a sharp decline could have negative effects on the overall economy - cutting back new home construction throwing thousands out of work that may worsen the long-term housing shortage. The cooling housing market is an intended result of the interest rate hikes by the Federal Reserve in March. Higher interest rates are supposed to discourage spending and reduce inflation. That's what the Fed, all too well, to cool the 2004-06 housing market producing a housing crash. California, and other western and SW cities have seen major price declines. A number of Southern cities, especially in Florida, continue to enjoy home price gains. The NE and MW are in the middle. Chicago homes are losing 0.5% in the last four months; and homes in the NY area gaining at 0.7%.(Slate 10/31/22) Housing prices: Why real estate is plummeting, but not everywhere. (slate.com)