Single-family homes, town homes, condominiums and co-ops, which represent "total existing home sales," were down 5.7 percent to a seasonally adjusted annual rate of 6.60 million units. Overall housing also declined in comparison to the previous year, with sales for December 2005 coming 3.1 percent below the December 2004 level of 6.81 million units.

"Long-term rates have been on a steady decline since November, which will have a stimulative effect on housing in the coming months. This year probably won't beat 2005's record year, but as long as unemployment holds strong and the interest rates stay within this range, housing will remain robust," said Bob Walters, chief economist, Loans, the nation's largest online lender.