DeKaser Calls Bottom For US Home Sales in 4Q07

Richard DeKaser, chief economist at National City Corp., believes that US Home Sales will bottom in the current quarter. Let's be clear here, he is talking about sales, he sees construction activity picking up 3 - 6 months after that.

(click image to play interview)

DeKaser is not some kind of permabull in denial, he makes a coherent argument as to why he thinks sales have bottomed in 4Q07. The basis of his argument is that previous housing downturns which were more severe from peak to trough such as the one from 1978 - 1982 were driven by an economic environment with double digit unemployment and double digit interest rates.

This time round Dekaser notes it is due to developments in the mortgage market rather than economic conditions. More specifically he means the development of exotic mortgage products such as subprime and Alt-A loans. Once this part of the origination industry is gone,which DeKaser argues it largely is, that should be it.

Whilst I disagree a bottom in sales will happen this quarter it is a compelling argument and sounds much better when DeKaser makes it so I urge you to watch the interview by clicking in the image above rather than read my waffle.