You must not have been retaining water at the time. I haven't weighed myself in a long time (I'm too scared to look at the scale these days), but when I used to weigh myself regularly, my weight would fluctuate the same 5-7 pounds over the course of the month. It was all water retention.
Nope. My weight, as measured on the scale, has been essentially the same for the past 6 weeks or so, but at least 2 people have told me in the last week that I look thinner. One is my Pilates teacher, who specifically pointed to my face being more defined and my torso narrower.
As I said earlier, it's a matter of losing fat and gaining muscle.