mrsemi is right. Opposite-sex friendships exist in the hetero world and it’s fine, so you have a few options:

• Think of your friend as just a friend. Even if he were gay/bi, there’s no guarantee that he’d be into you. You need to be able to have hot friends and be okay. In fact, he may have other hot friends he can introduce you to.
• Tell him he’s hot! See how he reacts to the compliment. If he’s strutting around in just boxers and socks he’s clearly comfortable being around you. Does he know you’re gay? He might be an exhibitionist.
• If it’s really distracting, let him know, but then you’re not going to get to enjoy the view anymore.
• Has your friend ever told you they’re straight? I’m bi and pretty much everyone just assumes I’m straight and I’m mostly okay with that. Mostly.
• You could slut it up and let him know that if he ever needs a release that you’d be happy to help. This is a difficult path to travel and it can easily cause a friendship to go sour.
• Maybe you just need to be in a good mutually-loving relationship? I find that crushes are more manageable when my own needs are actually being met instead of letting the horni build up too much.