WASHINGTON — New home sales fell in 2006 by the largest amount in 16 years, but they were up for a second straight month in December, raising hopes that the worst of the housing downturn is coming to an end.

The Commerce Department reported Friday that sales last month rose by 4.8 percent, following an even bigger 7.4 percent rise in November.

Those two increases, however, were not enough to salvage the entire year, with total sales of 1.06 million units, down 17.3 percent from 2005. That marked the biggest decline since a 17.8 percent plunge in the housing downturn of 1990.

The housing bust is occurring after a boom in which sales of both new and existing homes set records for five consecutive years. The lowest mortgage rates in four decades powered a surge in sales that was bolstered by investors making purchases in hopes of turning around and reselling the properties for quick profits.

Analysts attributed the big declines in 2006 to a cooling of that speculative boom.

The slowdown trimmed 1.2 percentage points off overall economic growth in the July-September quarter. Analysts are looking for an equally severe hit in the final three months of the year, with housing continuing to be a drag in the first half of 2007.

The downturn has meant a break for home buyers, as double-digit price gains during the boom years have slowed considerably.