I think that with all that is going on, his humor may not be the best. But for now, and maybe for good, its best to be neighborly and that is all. I feel bad that your feelings got all caught up in it though.
Well, take it as a lesson, lick your wounds for a while and move on. I know that sounds hard but at this point its all you can do. You can mourn a friendship, but not too long okay???