I was just reading an article and it stated "By the end of 2007, the weakness of the American housing market was infecting sales of cars. Falling house prices caused many people to put off getting a new car." So my question is, how does falling housing prices affect homeowners purchases? Is it because homeowners can't extract any equity from their homes anymore?
That and lower optimism about the future. It feeds into the consumer sentiment numbers, observe the published monthly consumer sentiment numbers.