The housing market and job market sent strong mixed messages in April and May, showing how tough it is to predict home prices and sales for the foreseeable future.

In April, the number of previously occupied homes (i.e. not new construction) that were put under contract to be sold experienced the highest increase in 8 years. The report was produced the National Association of Realtors.

The increase exceeded Wall Street analysts’ expectations, not that we should put much stock in what Wall Street analysts forecast in the first place. After all, these are the same overeducated eggheads that failed to forecast the deepest recession since the Great Depression.

Economists speculate that one reason home sales have increased is due to the $8,000 tax credit for first time home buyers that Obama implemented as part of his stimulus package.

Now here’s the bad news. While the report shows sales activity is picking up, housing prices are a long way from being healthy for a number of reasons:

1. Interest rates are creeping up, making homes less affordable, putting downward pressure on home prices.

2. Foreclosures continue to pile up in record numbers, creating a glut of homes on the market.

3. The job market continues to plummet. As more people lose their jobs, they will eventually lose their homes. In April, the private sector lost 545,000 jobs, and in May 532,000 jobs were eliminated. The housing market will not stabilize until the job market stabilizes.