The Commerce Department reported in late January that sales of new homes rose 2.9 percent in December. For the year, the department said a record 1.282 million new homes were sold, up 6.6 percent from 2004, capping a five-year rally.

Sales of new single-family homes climbed to a 1.269 million unit annual pace in December after falling sharply the previous month.

Economists had expected slower sales in December to a 1.225 million unit pace.

New home sales last month soared 22.7 percent in the Midwest and 11.1 percent in the West but fell 23.3 percent in the Northeast and 2.6 percent in the South.