Danielle DiMartino of the the Dallas Morning News asked that question in a very good editorial this morning. The increase in housing sales was not an organic event but instead due to the incentives that new homesellers are showering on potential buyers as they look for new homes in the region.

I have clipped an excerpt of the article but take the time to read the whole of it. The whole article is a  very well thought out piece.

Another way to look at how brisk activity remains is through the prism of mortgage equity withdrawal, or MEW, which captures proceeds from cash-out refinancing activity, home equity borrowing, and proceeds resulting from sales. After peaking above a $1 trillion annualized rate in the second and third quarters of last year, it dropped back to a $903 billion rate in the fourth quarter.

But then MEW made an unexpected turn, picking back up to $930 billion. An important detail is that all of the increase fell under the category of turnover or, as Goldman Sachs calls it, “inactive MEW.” Refinancing and home equity borrowing, or “active MEW,” declined as opportunities dried up and home price gains slowed.Goldman predicts active MEW will plummet over the next two years, as home price inflation slows sharply. This will result in a negative multiplier effect on home price gains – a vicious payback for refinancing activity goosing prices in recent years.

Still, the overall rise in first-quarter MEW is indicative of the speculative fervor that has characterized this real estate cycle as no other. It’s no wonder the Federal Reserve is adamant about not pulling back on interest rate hikes.

Read the rest at the Dallas Morning News

Related posts:

1. February U.S. Home Sales Climb 4.7% in February, 2009
2. Pulte Homes Says New Home Sales Will Increase When Foreclosures Slow Down
3. Case Shiller January 200 Report Shows Declines in Housing Speeding Up
4. Third Quarter Existing Homes Sales Increase 11.4 Percent, Prices Drop 11.2 Percent
5. Case Shiller June 2009 Report is Full of Good News!!!