Unbeknownst to buyers lining the sidewalks outside of frenzied open houses this spring, the Pandemic Housing Boom was already in its final inning. In March, Fortune published a pair of articles titled The housing market enters uncharted waters and An economic shock just hit the housing market arguing just that: The red-hot housing market would quickly shift in the face of spiked mortgage rates, which had jumped from 3.2% in January to over 4% by late March.

Not only did higher mortgage rates help to cause the Pandemic Housing Boom fizzle out, but it was replaced by what Federal Reserve Chair Jerome Powell now calls a “difficult correction.”

“For the longer term what we need is supply and demand to get better aligned so that housing prices go up at a reasonable level and at a reasonable pace and that people can afford houses again. We probably in the housing market have to go through a correction to get back to that place,” Powell told reporters last week. “This difficult [housing] correction should put the housing market back into better balance.”

The bad news for mortgage brokers and builders? This housing correction is far from over.

In fact, the shock hitting the U.S. housing market continues to grow: On Monday, the average 30-year fixed mortgage rate jumped to 6.87%. That marks both the highest mortgage rate since 2002 and the biggest 12-month jump (see chart below) since 1981.

Anytime the Federal Reserve flips into inflation-fighting mode, things get challenging for rate sensitive industries like real estate. Higher mortgage rates lead to some borrowers—who must meet lenders’ strict debt-to-ratios—losing their mortgage eligibility. It also prices some buyers out of the market altogether. A borrower in January who took out a $500,000 mortgage at a 3.2% rate would be on the hook for a $2,162 monthly principal and interest payment over the course of the 30-year loan. At a 6.8% rate, that monthly payment would be $3,260.

The economic shock caused by elevated mortgage rates, of course, underpins the ongoing housing correction. The housing correction is the U.S. housing market—which had been based on 3% mortgage rates—working towards equilibrium. As buyers pull back, the housing correction will cause inventory levels to rise and home sales volumes to fall. It’s also putting much of the nation at risk of falling home prices.

We’re already starting to see home price declines in bubbly housing markets like Austin, Boise, and Las Vegas. However, home price declines have yet to hit the whole country. According to Zillow, just 117 housing markets saw home price declines between May and August. In another 500 plus housing markets, prices were either flat or prices rose.

But more markets could soon move into the falling home price camp. As long as mortgage rates remain near 7%, housing analysts tell Fortune we’ll see downward pressure on home prices in the near term.

“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.

The big question: How much can “pressurized affordability”—a 3 percentage point jump in mortgage rates coupled with frothy home prices—push home prices lower? Unlike the 2008 housing crash, this time around we don’t have a housing supply glut nor a subprime crisis.

Want to stay updated on the housing correction? Follow me on Twitter at @NewsLambert.

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