Additionally, the Commerce Department noted an estimated 608,000 new homes were sold in 2017, representing an 8.3 percent jump compared to the 561,000 sold in 2016. The yearly sales, which are based on a 12-month average, also cracked the 600,000-unit mark for the first time in a decade.
"Despite the dip in December's new-home sales, we can continue to feel confident that residential building will persist steadily, especially as we begin to approach the busy selling season", says Bill Banfield, executive vice president at Quicken Loans.
In a separate report, the National Association of Realtors said total existing home sales, which include single-family homes, townhomes, condominiums and co-ops, increased by 1.1 percent in 2017 to 5.51 million - more than the 5.45 million sold a year earlier.
The Northeast markets had the fewest new home sales across 2017.
The bigger than expected monthly decrease in new home sales reflected declines in sales in all four regions of the country.
NAR said existing home sales tumbled by 3.6 percent to an annual rate of 5.57 million in December after jumping by 5.1 percent to a revised 5.78 million in November. "A balanced market is six to seven months".
Sales of homes priced between $300,000 and $399,999 fell by eight points to 22% of all sales.
"It is obvious that the new-home construction and sales are not meeting the demand", Ratiu said.
Purchases of newly built single-family homes - a relatively narrow slice of all US home sales - decreased 9.3% to a seasonally adjusted annual rate of 625,000 in December, the Commerce Department said Thursday, a sharper fall than economists surveyed by The Wall Street Journal had expected.
The annualized pace of new-home sales for December - which gives a snapshot of the pace of sales during that particular month - continued to show volatility.
This is 9.3% below the revised November rate of 689,000, but is 14.1% above the December 2016 estimate of 548,000.
Prospective Charlotte home buyer Krishan Intwala, 32 years old, recently shifted focus from looking at updated resale homes to looking at new homes, recognizing the higher price of new homes makes it tough.