NEW YORK (Bloomberg) — US holiday retail sales rose a disappointing three percent from 2005 as a slowing housing market and higher energy costs cut into spending, MasterCard Advisors said.The gain is less than the 5.2 percent increase last year and the smallest growth since the survey started in 2003, MasterCard Advisors said yesterday in a statement. Electronics and luxury goods had the strongest sales, according to the company’s SpendingPulse survey.

“Retailers are going to find that this was a pretty modest Christmas season,” Britt Beemer, chairman of Charleston, South Carolina-based America’s Research Group, said in an interview.

Holiday sales slowed this year because of increases in interest rates and gasoline and heating prices, said Michael McNamara, vice president of research at MasterCard Advisors. Warmer-than-normal weather in some regions of the US hurt apparel sales, he said.

Retail sales climbed 23 percent on the weekend before Christmas as consumers hit the stores for last-minute shopping, and that may have helped push revenue to the five percent gain forecast for the season by the National Retail Federation. That would be the slowest pace since 2002.

Wal-Mart will issue a preliminary report on this month’s sales on December 30. It has forecast a gain of up to one percent. Most other retailers will disclose sales for December on January 4.

“In terms of real dollar spending, I think that we’ve got some problems,” said Richard Hastings, New York-based analyst with Smyth-Bernard Sands. “This year, unfortunately, I think Q4 earnings are going to be a problem.”

The S&P 500 Retailing Index dropped 1.81 to 496.86 at 3.15 p.m. It has fallen less than one percent since October 31. Wal-Mart Stores Inc. gained 48 cents, or 1.1 percent, to $46.02 in New York Stock Exchange composite trading.

December 23 was probably the second-biggest shopping day of the year after the day after Thanksgiving, with sales of about $8.72 billion, researcher ShopperTrak RCT Corp. said December 24. Sales for December 22 and December 23 combined were up 22.5 percent from a year earlier, the Chicago-based researcher said.

“The season came in a little softer than some expected,” said McNamara of MasterCard Advisors, a unit of Purchase, New York-based MasterCard Inc. “As we are going into 2007, we don’t have the same consumer momentum as we did heading into 2006.”

The MasterCard data from the day after Thanksgiving to Christmas Eve are adjusted for an extra shopping day compared with last year. It’s based on sales using cash, cheques and MasterCards. On an unadjusted basis, 2006 holiday retail sales rose 6.6 percent, a smaller gain than 8.7 percent in 2005.

“This is the first year, and I’ve been doing this for 20 years, where there was no clear-cut category winner,” said Beemer.

Apparel lagged overall retail sales as warmer-than-average temperatures crimped sales of coats, gloves and other cold- weather apparel, McNamara said today. Men’s clothing and footwear performed better than women’s and children’s apparel, according to MasterCard.

“There is no question that the coat business and the fur business were hurt severely,” Michael Gould, chairman of Bloomingdale’s, which is owned by Cincinnati-based Federated Department Stores Inc., said in an interview.

Retailers are looking to the week after Christmas to pick up sales. About 18 percent of store traffic will occur this week, when people redeem gift cards, ShopperTrak co-founder Bill Martin said last week.

The NRF has forecast the average amount spent on gift cards by consumers will rise to $116.50 this holiday season from $88 last year.

“Certain sectors like department stores will be pulling out the stops for people to redeem gift cards and provide additional discounts to try to bolster sales that were otherwise relatively soft,” said Wayne Best, senior vice president of economic analysis for Visa USA. Best cut his forecast for November and December retail sales growth to about 6.5 percent from 7.5 percent.