There has been an 8% drop in the number of families in emergency accommodation.
Department of Housing figures for December show there were 1,408 homeless families, down 122 on the November figures.
The total number of homeless adults fell by 16 last month, while the number of children dropped by 254.
However, Roughan MacNamara from Focus Ireland says the reduction follows a major increase during 2017.
He said: "We would warn that the annual stats are showing a 17% increase in the number of families that became homeless in the klast year.
"While we don't want to be negative, we'd also urge caution, we'd need to be realistic, and say that I think these figures have ebeen recorded there has traditionally always been a drop in December and sadly a sharp rise again in January."
ICHH Head of Communications, Brian McLoughlin, said: "While the reduction in numbers is welcomed we hope that we see this trend continue month on month moving forward.
"We would also err on the side of caution as we saw reductions in the number of homeless children the previous year from November 2016-January 2017 but by February the number of children had increased significantly and it continued to do so for the rest of the year.
"To put it in context on Christmas Day 2015 there were 5,214 people homeless by Christmas Day 2016 this number had risen to 7,148 and continued to rise as by Christmas Day 2017 there were 8,587 people homeless.
"December 2015 there was 1616 children homeless and by December 2017 the number of homeless children was 3,079 so there is still a lot of work to do to end this crisis.
"We need to see a lot more social and affordable housing delivered quickly to prevent further year on year increases."
The number of homeless male adults has gone up by 64 and Depaul said it reflects the need for a move away from One Night Only, partial access hostels, towards providing more Supported Temporary Accommodation.
They said that emergency one night only hostels are partial access, meaning service users must leave the premises in the morning, often with nowhere to go until late in the evening when they can again access hostel services.
The stability of an STA gives people the time and support needed to make positive changes in moving on from homelessness, said Depaul.
While welcoming the overall drop in homeless numbers, Depaul CEO Kerry Anthony, said: "Just 16 adults left emergency accommodation in December.
"We have the power to drastically increase the number of positive move ons for adults from emergency accommodation if we increase the number of Supported Temporary Stay beds.
"An emergency One Night Only bed should not be what a homeless person aspires to, an uncertain bed you can only access between the time of 6pm and 10am is not enough. We need to do better for homeless adults. "
Barnardos also welcomed the decrease.
The charity's Head of Advocacy, June Tinsley, said: "Hopefully it represents a turn in the tide, but truthfully it is more likely this is a seasonal trend as parents try everything to prevent spending Christmas in emergency accommodation.
"In fact, many of these families have likely joined the growing number of ‘hidden homeless’, those without their own home forced to live with friends or extended family in often over-crowded and inappropriate accommodation.
"It should also be noted, as reported this week, that 76% of households which were supported out of homelessness in 2017 were transitioned into tenancies in the private rental sector.
"The continued over-reliance on the private rental sector to support social housing needs is only kicking the can down the road as these families will continue to face the uncertainty and volatility of the rental sector."