Of course, just weeks later, the Pandemic Housing Boom began to fizzle out. Each forecast since, Zillow slashed its 12-month home price outlook. In April, Zillow revised it down to 14.9%. In May, it was revised down to 11.6%. In July, it was revised down to 7.8%. In August, it was revised down to 2.4%. In September, it was revised down to 1.2%.

However, this week Zillow finally stopped revising its 12-month outlook downward. Over the coming 12 months, Zillow now expects U.S. home values to rise 1.4%.

Whenever a firm like Zillow says the “U.S. housing market” or “U.S. home prices,” it’s talking about an aggregated view of the country. In each regional housing market—heck, in each neighborhood—the results could vary significantly. To better understand Zillow’s forecast, let’s delve into the data for regional housing markets. We’ll start by looking at what happened to home values this summer, and then we’ll dig into Zillow’s regional forecasts.

Back in May, Moody’s Analytics chief economist Mark Zandi told Fortune that rising mortgage rates coupled with "overvalued" home prices would push the U.S. housing market into a housing correction. A housing correction is a period in which the U.S. housing market—which got priced to 3% mortgage rates—would work toward equilibrium. In every market, that would translate into a sharp decline in home sales. It would also, Zandi said, put frothy markets at risk of home price corrections.

That's exactly what we saw this summer: Home sales plummeted across the nation, and frothy markets in the Western half of the country also saw declining home prices.

According to Zillow, 117 regional markets (see chart above) saw a decline in home values between May and August. Of those, 36 markets saw a decline greater than 3%. For the most part, these markets fell into one of two camps. Either they're frothy boomtowns—like Austin (down 7.4%) and Boise (down 5.3%)—or they're high-cost tech hubs. Frothy markets simply saw home values become detached from local fundamentals. Markets like Seattle (down 3.8%) and San Francisco (down 7.8%) are particularly rate sensitive. Not only do spiked interest rates deter buyers from high-end homes in San Francisco and Seattle, but they also have an acute impact on tech sector employment.

"Across the country, affordability challenges have pushed potential buyers to the sidelines. Of course, this demand destruction has been more pronounced in some markets than in others. Markets with the highest prices a year ago saw disproportionately larger declines in active demand in the 12 months that followed," write Zillow researchers.

While 117 markets saw falling home values this summer, another 779 markets saw rising home values. In East Coast markets like Miami (up 4.1%) and Myrtle Beach, S.C. (up 4.5%), those gains were fairly strong. Simply put: This isn't a one-size-fits-all slowdown.

Through the final three months of 2022, Zillow expects the home price correction to continue in Western housing markets, albeit at a milder pace. Between May and August, markets like Phoenix and Salt Lake City saw home values fall 4.4% and 7.1%, respectively. Between the end of September and the end of December (see chart above), Zillow expects home values to fall by 2% in Phoenix and remain flat in Salt Lake City.

In total, Zillow expects home values to fall in 118 regional markets in the final three months of 2022. It expects 747 markets to post rising home values and 29 markets to remain flat.

Heading into 2023, Zillow predicts the home price correction will lose steam in some markets while it picks up steam in other places.

In markets like Boise and Phoenix, which saw sharp home price corrections this summer, Zillow expects prices to rebound a bit in 2023: Over the coming 12 months, Zillow expects home values to rise 4.3% in Boise and 1.7% in Phoenix.

Nationally, Zillow expects 271 markets to post falling home values between September 2022 and September 2023—while 607 markets post rising home values, and 19 markets remain flat.

Why does Zillow think the home price correction won't go national? It boils down to tight supply.

"A pullback in demand has pushed prices downward, but while the housing market isn’t nearly as tight as it was earlier, a lack of for-sale listings is providing some support for prices against further declines," write Zillow researchers. "Active for-sale inventory rose steadily through the spring and summer but still sits nearly 40% below pre-pandemic levels."

Spiked mortgage rates have not only translated into fewer homebuyers, it's also sidelined some sellers. Some sellers refuse to lower their price point, while others aren't eager to give up their 2% or 3% fixed mortgage rate. Industry insiders are calling the phenomenon the "lock-in effect."

"This dynamic is unlike previous housing market slowdowns that led to price declines, and persistent tight supply could insulate the market from a significant price correction, even as demand has fallen off. For instance, in the Great Recession, home value declines were accompanied/prompted by an increase in new listings, including many distressed sales," write Zillow researchers.

Let's be clear: Zillow remains on the optimistic side.

A growing chorus of research firms and banks are predicting the sharpest home price declines still await. That includes firms like Goldman Sachs, Wells Fargo, Morgan Stanley, Moody's Analytics, Capital Economics, Zonda, Zelman & Associates, Fannie Mae, and John Burns Real Estate Consulting.

“The longer that [mortgage] rates stay elevated, our view is that housing is going to continue to feel it and have this reset mode. And the affordability resetting mechanism right now that has to happen is on [home] prices. And so there are a lot of markets across the country where we’re forecasting that home prices are going to fall double digits,” Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune.

Only CoreLogic and the Mortgage Bankers Association agree with Zillow that we won't see a year-over-year decline in U.S. home prices in 2023.

Want to stay updated on the U.S. housing market? Follow me on Twitter at @NewsLambert.