What Does a Housing Market “Correction” Look Like?

The Federal Reserve recently announced another interest rate hike, with Chairman Jerome Powell noting that housing prices rose at an “unsustainably fast level” during the COVID-19 pandemic and that a “correction” is needed in the housing market.

In the capital markets, a correction refers to a 10%–20% drop in share prices, but the real estate market doesn’t define a correction quite as neatly. So what might a housing market correction look like in practical terms? And, just as important, what does it mean for homeowners?

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