In a week that's already seen a slew of healthy economic data releases, housing appears to be a blemish on an overall strong economic backdrop.
This week's revised second quarter gross domestic product figure beat expectations, notching the fastest quarter-over-quarter pace of growth in 2½ years. Private sector job growth also surpassed estimates.
Housing performance, however, is a "yellow flag" for the U.S. economy, said Matt Maley, equity strategist at Miller Tabak.
The latest monthly housing starts data released in mid-August reflected a substantial and unexpected decline: The Commerce Department reported that housing starts declined 4.8 percent to a seasonally adjusted annual rate of 1.16 million units.
"The one concern is that housing starts data has been down in four of the last five months. It's a very good leading indicator on what's happening in a very important sector of our economy," Maley said Thursday on CNBC's "Trading Nation."
Given the importance of housing data like housing starts, existing home sales and home prices, further weakness "could be a problem for the growth that we've been seeing over the last few years," Maley said.
"My stance right now is that it's a small yellow flag on the economy, not a red one at all. So we're going to have to see more negative data before this becomes a serious issue. But it's something we'll be watching very closely in the next few months," he said.
Housing data released Thursday by the National Association of Realtors reflected weak pending home sales. The index is now 1.3 percent below its level one year ago, and has now fallen on an annual basis in three of the past four months.
This week's most widely watched data point will come at 8:30 a.m. EDT Friday, when the Bureau of Labor Statistics releases its employment report for August. In a survey by Reuters, analysts expected that 182,000 nonfarm job had been created last month.