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Early indications are the auto industry could be down 10 percent in August sales, following the plunge of 19 percent in July sales.

Those tracking the industry are increasingly attributing the continually falling numbers as being connected to the mortgage problems across the U.S.

John McDonald, a spokesman for GM tried to head off that thinking, saying, "It is one of a number of headwinds. There's fuel prices, there's interest rates and there's housing prices. But we're not seeing anything new that we've not been talking about for more than a year."

But another executive speaking on condition of anonymity said the only reason things may not show the reality in August is because the auto industry has put out enough incentives, especially GM (GM) on its pickups, so it could hide the real problem housing is having on auto sales.

Another problem offering incentives does is put pressure on profits, as increasing cash-back offers and other means of getting consumers to buy puts a drain on earnings.

Others in the auto field say auto buying is probably the first item people stop purchasing when they start tightening up their finances.

According to data from CNW Research, car survey specialists, 13.6 percent of consumers are either putting off plans to buy a car, or forgetting about it all together. That's up from 10.1 percent over last year. The major reason given for the decisions are issues related to their homes.

Analysts and economists are saying that August won't be the only month this will drag on the industry, it could go on for months as people are skittish on putting out money on big ticket items that can be waited on.

If the mortgage problems continue, it could also start cutting into other consumer spending.

The issue is many consumers have used their houses as their personal piggy banks over recent years. Now that housing prices have slowed down, and the bank called their house can't be relied on as much, consumers have tightened up, and will continue to tighten up until things turn around.

For the auto industry, the impact is already here, and no amount of incentives over a period of time will be able to hide it.