The S&P/Case-Shiller home prices indices for December showed that Dallas home prices continued to cool in December. While the national index for home prices was 4.7 percent higher, Dallas trailed at an annual growth rate of 3.9 percent. The index for Dallas home prices was essentially flat for the sixth consecutive month.

Among the major cities in the 20-city index, Las Vegas, Phoenix and Atlanta showed the highest yearly gains in December, with increases of 11.4%, 8.0% and 5.9% respectively. San Diego and DC showed the smallest increases, registering price gains of 2.3% and 2.7%.

Home prices are still exceeding wage gains in many U.S. metro markets, but the price gains continue to shrink. Interestingly, Zillow’s chief economist and noted housing market cheerleader, Aaron Terrazas, thinks everything is just getting back to normal. He better hope so, because if the market turns further south, his current employer is setting itself up to become an over-leveraged mess as it dives even deeper into the artificially inflated U.S. housing market.

“Annual home price growth, while still rapid in a handful of the most in-demand and/or affordable markets, has fallen to a pace not far off historic norms and feels largely sustainable for now at a national level around 5 percent.”

As readers know full well, normal doesn’t exist anymore. The Fed made sure of that, with a decade-long effort to prevent the broader market cycle. Unfortunately, the Fed is running out of ammunition with the housing market and the economy stagnating. It could take years for the current housing market imbalances to work themselves out. All of that pent-up deflation will eventually work its way to the market, and the “experts” at the Fed will again wonder why they didn’t see it coming.