Home price inflation and rising mortgage interest rates may be taking their toll on the nation's home ownership rate.

The U.S. Census Bureau said recently the rate of home ownership was 69 percent in the fourth quarter 2005, down from the record 69.2 percent set in the fourth quarter in 2004.

It's the first time since 1994 that the rate of home ownership at year's end hasn't increased from the previous year and the third quarter in a row that the rate hasn't posted a year-over-year gain.

The post-World War II economic and housing boom that gave rise to the suburbs fueled a steady climb in overall home ownership rates from 55 percent in 1950 to the record 69.2 percent in 2004.

Some of the recent decline in the rate of home ownership is due to the high and rising cost of housing.

By the end of the third quarter of 2004 home prices had risen more than 14 percent nationwide, according to the Office of Federal Housing Enterprise Oversight. Prices rose another 12 percent a year later, by the third quarter of 2005.

During the past five years when home prices rose a total of more than 55 percent, the 12.05 percent year-to-year increase by the third quarter 2005 was the smallest increase -- revealing the housing market is currently losing some of its luster.

Rising mortgage rates are making it more difficult to own already expensive housing.

On February 23, 2005 Freddie Mac's Weekly Mortgage Market Survey put the average fixed interest rate on 30-year conforming loans at 6.26 percent, up from 5.69 percent during the same period last year.

Adjustable rate mortgages are up substantially too. During the same period five-year ARMs averaged 5.96 percent compared to an average 5.05 percent a year ago.

In some instances, interest rates are rising faster than home prices are falling and that's offsetting the potential for greater affordability that comes with falling home prices.

Home ownership rate was highest in the Midwest at 72.8 percent, followed by the South at 71.1 percent. The Northeast at 65.4 percent and the West, at 64.6 percent were lowest, although they were not different from each other. Even as the Midwest retained the title as home ownership rate leader, it's rate fell from the fourth quarter in 2004 while the other regions remained virtually unchanged, the Census reported.

California, Hawaii, Massachusetts and New York are among the states with the lowest rates of home ownership; Alaska, Delaware Michigan and West Virginia are among the states with the highest rates.

Published: February 24, 2006

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.