The highlight on the economic calendar for US traders Friday is the April housing starts report. Economists are optimistic with the consensus falling for a 3.6% pickup in starts to 980K.

Housing starts

Housing starts

The Fed is beginning to fret about housing despite prices rising about 14% year-over-year. The problem is that if they flatten out, what happens to inflation?

Today’s NAHB housing market index fell to 45 from 47 and it was forecast to rise to 49 so that’s an early indication that tomorrow’s number will disappoint. In March, new home sales plunged to 384K compared to 450K expected.

There’s chatter about the huge percentage of cash sales in housing and that suggests that far too many buyers are investors rather than owner occupiers and that’s not how it looks in a healthy market.