New-home sales dropped 7 percent last month to a seasonally adjusted 414,000-unit annual rate, the National Association of Home Builders said.

Citing data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, the NAHB said sales dropped 36.4 in the winter-storm heavy Northeast and also declined 7 percent to 9 percent in the South and West. The Midwest saw sales increase 17.6 percent.

"December's decline in new-home sales follows elevated levels in the previous two months and means the fourth quarter was still much stronger than the third," said association Chairman Rick Judson, a home builder from Charlotte, N.C. "While we expect sales to gain strength in 2014, builders still face considerable constraints, including tight credit conditions for home buyers, and a limited supply of labor and buildable lots."

For the year, home sales were 16.4 percent higher than in 2012.

"Consumers are getting used to more realistic mortgage rates, which still remain favorable on a historical basis," said NAHB chief economist David Crowe. "As household formations and pent-up demand continue to emerge, we anticipate that 2014 will be a strong year for housing."