New single-family home sales in the U.S. jumped last month to the highest level in more than six years, well outpacing economists' predictions.

The increase in new home sales shows that despite fickle month-to-month housing numbers, the U.S. housing recovery is continuing, according to a report from Reuters.

The U.S. Department of Commerce on Wednesday released its monthly housing report, showing that new home sales in August reached a seasonally adjusted rate of 504,000 units, up 18 percent from July.

August saw the most new single-family homes sold since May 2008 and was the second straight month of gains, Commerce Department data shows.

Prior to the release of the report, economists projected that August would record a 430,000-unit pace.

Despite the strong numbers for new-home sales, existing home sales fell last month for the first time in four months as institutional investors weren't as active as they had been, The Wall Street Journal reported. Some economists say that the absence of the institutional investors in the housing market could be a positive, as their presence was driving up prices.

Last month, new home sales in the U.S. West jumped 50 percent, while new home sales in the Northeast were up 29.2 percent and the South was up 7.8 percent. The Midwest reported stagnant new home sales. Over the last several months, the South has had the majority of housing activity.

A survey was released that week that reported that homebuilder sentiment in September was at its highest level in almost nine years. Many builders reported a strong increase in buyer traffic.

The stock of new houses on the market reached its highest level in four years. If new homes move at the same clip they did in August, it would take 4.8 months for supply to drain, compared to the 5.6 months of supply reported in July.

KB Homes also reported earnings that underwhelmed on Wall Street, while the shares of two other large-scale homebuilders also fell. KB Homes shares were down 6.89 percent, Pulte Group fell 1.74 percent and Toll Brothers slipped 1.27 percent.