In May 2022, Moody’s Analytics chief economist Mark Zandi made a bold proclamation to Fortune: Not only had the housing market peaked, but a housing correction would soon ensue. At the time, Zandi expected national home prices to flatline while home prices in frothy housing markets like Boise and Austin would fall by 5% to 10%.

The underlying reason for that call: The Pandemic Housing Boom, Zandi said last spring, had caused home prices in most markets to become detached from fundamentals like local incomes. In fact, in the second quarter of 2022, Moody’s Analytics estimated that the U.S. housing market was “overvalued” by 26.98%. That was above its housing-bubble-era peak of 22.22% in Q4 2022, and far above the 2.17% “overvaluation” in Q2 2018.*

Fast-forward to spring 2023, and the underlying fundamentals are already improving. For one thing, Zandi was right—the housing market did slip into a correction in the second half of 2022, and prices in frothy markets like Austin and Boise did fall by around 10%. House price declines in overheated markets, coupled with rising household incomes, also mean that the spring 2023 housing market isn’t as “overvalued” as spring 2022.

Indeed, an updated analysis by Moody’s Analytics finds that the U.S. housing market was “overvalued” by just 16.85% in the first quarter of 2023—a nearly 10-percentage-point improvement from Q2 2022. Even Boise, which was “overvalued” by 71.48% in Q2 2022, has seen its “overvaluation” level come down to 54.02%. The interactive chart below shows Moody’s “overvaluation” or “undervaluation” scores for the nation’s 440 largest markets between Q1 2000 and Q1 2023.

Will housing market fundamentals continue to improve past Q1 2023? Housing economists, who are watching as home prices tick up this spring in most regional markets, are fairly divided on the topic.

Firms like CoreLogic and Zillow predict that tight inventory levels will push national home prices up by 4.6% and 4.8%, respectively, over the coming year. If those bullish forecasts come to fruition, housing fundamentals would indeed stop "healing."

However, if Zandi is right, "overvalued" levels will continue to fall. As mortgage rates kept spiking in 2022, Zandi revised down his outlook. In October 2022, he predicted that peak-to-trough national home prices would fall around 10% by the expected bottom in 2024 or 2025. (The Moody's Analytics forecast model predicts a 8.6% peak-to-trough national decline, including a 4.4% decline in 2023 alone.)

In order for Zandi to be right, overheated regional housing markets would need to once again flip into "correction mode" during the seasonally slow months later this year.

Among the 404 largest markets tracked by Moody's Analytics—the financial intelligence arm of credit rating giant Moody's—17 are "undervalued." That includes markets like Chicago and Baton Rouge. It also includes San Francisco, which got hit hard by the housing correction in the second half of 2022.

Meanwhile, 387 of the nation's 404 largest markets are "overvalued." That includes 157 markets which Zandi calls "significantly overvalued"—meaning they're "overvalued" by over 25%. At the height of the boom in Q2 2022, 195 markets fell into that camp. Those markets, including places like Nashville ("overvalued" by 46.66%), Tampa ("overvalued" by 37.56%) and Austin ("overvalued" by 36.62%) are at the highest risk of home price declines, Zandi says.

Keep in mind that just because a housing market is "overvalued" doesn't mean home prices there will decline. Historically speaking, housing markets can remain "overvalued" for years, and when fundamentals do improve, it's often through rising incomes—not falling home prices.

*According to Zandi: "The Moody’s Analytics housing valuation measure is the percent difference between actual house prices and house prices historically consistent with wages and salaries per capita and construction costs. The price of a house is ultimately determined by the value of the land upon which it resides which is tied to the opportunity cost of the land as measured by wages and salaries, and the cost to build the home. Nationwide, approximately one-half of a home’s value is the land and the other half the structure, but this varies considerably across the country. In San Francisco, for example, the land is far and away the biggest part of the home’s value, while in Des Moines, Iowa, it is the opposite. Our housing valuation measure accounts for these differences."