WASHINGTON (Reuters) – Sales of new homes raced to their highest level in eight months in December, but gains were driven by a surge in the West that economists were reluctant to call a sign of a recovery in the market.

Single-family home sales jumped 17.5 percent to a seasonally adjusted 329,000 unit annual rate, the Commerce Department said on Wednesday. Economists had expected an increase to only a 300,000-unit pace.

Even with last month's gain, new-home sales are down 75 percent from their peak of 1,283 million-unit pace in 2005.