While home sales across the country continue to fall, the housing market in Minnesota is showing some signs of momentum. Or at least stability.

In Minnesota, there were 7,284 home sales during January and February, a 5.7 percent increase over the same period last year, according to the Minnesota Association of Realtors.

Nationwide, the results were less promising. During the first two months of the year, home sales have remained relatively flat compared to 2010. However, on a seasonally adjusted basis, February sales took a turn for the worse, falling 9.6 percent, the National Association of Realtors reported Monday.

"Home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers," said Lawrence Yun, chief economist for the national Realtors group. "This tug and pull is causing a gradual but uneven recovery."

The latest data shows just how volatile the housing market is, both locally and nationally, as the economy struggles to regain its footing and the mortgage industry faces an overhaul. Economists had expected sales to fall only about 4 percent, causing some to wonder if the worse-than-expected sales last month mean that a U.S. recovery is still far away.

Clearly, the biggest obstacle standing in the way of anything that looks like a recovery is the foreclosure crisis, which dominates the market in every corner of the nation and continues to put downward pressure on home prices.

Across the country, prices fell to the lowest level in nearly nine years. Even in Minnesota, where sales have picked up in recent months, sale prices continue to fall. During February the median sale price of all closed sales fell 8 percent to $129,900, luring bargain shoppers into the market.

"Home buyers in Minnesota have recognized that there are outstanding values in the marketplace," said Chris Galler, chief operating officer of the Minnesota Association of Realtors.

While statewide sales figures showed gains, that's not true everywhere in the state. The Realtors association divides the state into 13 regions that correspond to the economic development regions established by the Minnesota Department of Employment and Economic Development.

During January and February four of those regions showed steep declines in sales and only five showed an increase in the median sale price. The regions that did well have strong regional economies tied to a growth industry.

Farmers, for example, are doing particularly well right now because of strong demand for corn and wheat. So in the northwest region, which includes the fertile Red River Valley, sales rose 27 percent.

The south central region, which includes Mankato, saw similar gains. Not true for areas that rely on manufacturing, which was clobbered by the recession. In the Arrowhead region, which includes Duluth, sales were down 10.9 percent. Agents in that part of the state have been anxiously awaiting the reopening of two iron mines.

"That area hasn't had a lot of changes or new people moving in," Galler said. "It's hard for prices to increase; demand is still the key."

The same factors apply in the Headwaters region, where sales fell 35 percent and prices were down 34 percent. Data for the report is provided by agents who are members of the Regional Multiple Listing Service.

In some communities, especially small, rural towns, agents don't subscribe to the service. Galler said that the report still captures the bulk of transactions in the state.

In just the seven-county metro area, where the vast majority of transactions are included in the report, the number of closed sales during January and February rose 3.9 percent.

Though January and February are typically the slowest months of the year, analysts pay close attention to sales activity during these months because they are on the cusp of the spring buying season, which typically starts in late February and early March.

Agents say that this year harsh weather kept many buyers inside. That's evident judging by data released earlier this month by the Minneapolis Area Association of Realtors, which said that in the 13-county metro area, pending sales -- an indication of future closed sales -- had fallen more than expected compared with last year at this time. And according to a weekly report released Monday by the Minneapolis association, pending sales in the 13 county metro area were down 21 percent.

Brad Fisher, a sales manager for Edina Realty and the president of the Minneapolis Area Association of Realtors, said local buyers and sellers need to brace themselves for declines in sales at least through early spring. Sales through the first half of 2010 was buoyed by the federal home-buyer tax credit, which expired last April.

"We pulled that spring business from the second quarter into the first quarter," Fisher said.

Jim Buchta • 612-673-7376