The sales rate for new homes fell 7 percent from November to December, the second consecutive month of declines following a double-digit gain in October. The regression, caused in large part by the harsh winter that has gripped most of the country, put a damper on 2013's 16.4 percent gain in the sales rate compared to 2012.

Sales of new U.S. homes dropped more than expected in December, as cold weather chilled the end of the industry's best year since 2008.

Purchases decreased 7 percent to a 414,000 annualized pace, according to a January 27 report from the Commerce Department. Demand jumped 16.4 percent to a 428,000-unit pace for all of 2013.

Sales were at a 445,000-unit pace in November, and December marks a second consecutive month of decline. Economists point to the frigid winter that has gripped most of the country in that time as cause for the decline, as well as the unexpected 14.9 percent surge in October sales that most considered unsustainable. Sales in the Northeast, which was hit hardest by cold temperatures, dropped 36.4 percent to their slowest pace since June 2012.

The median price for a new home rose 4.6 percent from December 2012. For the year as a whole, prices were up 8.4 percent, the largest gain since 2005. The median new home price climbed to $265,800, the highest on record.

The supply of houses on the market fell 2.8 percent to 171,000 units, the lowest level since July. At December's sales pace it would take five months to clear the supply of houses on the market, up from 4.7 months in November. A six-month supply is normally considered a healthy balance between supply and demand.

Demand for new homes has recovered somewhat from the record-low of 306,000 homes sold in 2011. That compares with a record peak of 1.28 million in 2005 at the height of the housing boom.