Driven by the lowest mortgage rates since John F. Kennedy was president, people are buying more homes in a sluggish economy than they did during the late-1990s boom. Prices have risen faster over the last four years than at any time in the previous decade.

The housing boom has been a windfall for many: homebuilders, remodelers, real estate agents, furniture and paint store owners and homeowners. In many markets, the stunning increase in home values has been the only good financial news for owners faced with slumping stocks and slow wage growth.

Yet the good times may end soon, painfully for some. Economists worry that a housing bubble may have developed, similar to the steep climb in stock prices in the late 1990s.

Federal Reserve Chairman Alan Greenspan warned again this week that interest rates can't remain so low forever. Many economists think they might start to rise late this year and next year. When they do, it will be the equivalent of sucking oxygen from a raging fire. Home sales will slow. Price increases will tail off and could reverse in some markets.

Jan Hatzius, an economist at Goldman Sachs investment bank in New York, thinks the national average home price could fall for the first time in the history of the House Price Index, which is published by the Office of Federal Housing Enterprise Oversight, an agency responsible for mortgage market oversight, and dates to 1975.

The fall, should it happen, would be a reverse of the housing boom of the last few years - a boom fueled by the simple mathematics of mortgage interest rates.

The benchmark 30-year fixed-rate mortgage stands at 5.59 percent, down from 8 percent in 2000. At 8 percent, payment on a $100,000, 30-year-loan is $734 a month. At today's rates, the same monthly payment would cover a $127,000 mortgage loan, permitting buyers to spend more on houses with the same income.

Home sales have exploded as a result, setting records for three straight years. New-home sales grew 10.7 percent in 2003, powering them through the 1 million mark. A 9.6 percent rise in existing home sales drove them over 6 million, also for the first time in history.

The House Price Index, which covers existing home sales up to about $400,000, rose 8 percent last year and has risen at least 7.5 percent annually since 2000. By comparison, prices rose only 5 percent a year in the late 1990s.

Reports of spiraling prices may come as a surprise to homeowners in markets such as Charlotte, N.C.; Dallas-Fort Worth; Detroit; and San Jose, Calif., where prices have been rising about 3 percent a year, or even less.

Those moderate increases have been more than offset by the explosion in prices elsewhere, notably in congested parts of the East and West coasts. Prices rose 16.6 percent in Miami last year and 11.4 percent in Philadelphia. Another kind of market frenzy has hit areas such as Charlotte and Dallas-Ft. Worth.

Though prices remain relatively subdued, the flood of buyers has sparked a flurry of new-home construction in areas where available land for new homes is plentiful and cheap.

Economists draw a parallel between today's high housing prices and a high price-earnings ratio for a stock, usually a sign that the stock is overvalued and due for a fall.

For housing, the "earnings" are the rent that could be collected on a home. Home prices have been rising much faster than rents, pushing the price-rent ratio far above its historical average. That suggests that either prices will fall or rents will rise.

"Nothing can go up forever," said Jeff Culbertson, the Sacramento, Calif.-based president of Coldwell Banker Northern California.

The stock-market analogy goes only so far. Housing bubbles don't usually pop, they deflate, sometimes seeping air for years. As the real cost of buying a house rises with mortgage rates, sellers usually are reluctant to lower prices to what buyers can afford. Houses can remain on the market for months or years before sellers accept reality and take their losses.

Some people decide to pull their homes off the market and stay put because they can't afford to take a loss on a house they bought at top dollar or on which they've spent hundreds of thousands of dollars adding a master suite and luxury kitchen - figuring somebody else would bail them out for the granite countertops and the whirlpool bath.

If they do move, their new mortgage will carry a higher rate, limiting how much new home they can afford.

Fewer homeowners will be able to tap their homes for cash by refinancing mortgages or taking out home equity loans or lines of credit - with annual interest rates now as low as 3.5 percent.

Higher rates also mean some lower-income families will no longer be able to afford homes. Low rates have enabled many to buy homes, driving up the proportion of U.S. households that own their homes to a record 68 percent.

In areas where new construction has kept a lid on prices, the pool of prospective buyers has shrunk. Once mortgage rates rise, demand for homes could plunge.

"What happens next year and the year after?" said Edward Leamer, the director of the economic forecasting center at the University of California-Los Angeles business school. "Who's going to buy new homes two years later?"

The homebuilding industry, a major generator of jobs in these regions, could collapse.

The biggest outstanding question is whether the housing market will deflate rapidly or at a more leisurely pace.

"What we would ask for is kind of a slow slowdown," Culbertson said. "We don't want interest rates to all of a sudden pop up a percent or a percent and a half."

Should the pop be sudden, the broader economic consequences of a housing market slowdown could be severe, depending on how strong the rest of the economy is.

If the economy is strong enough, housing might remain relatively healthy, despite rising mortgage rates. New jobs will be created, wages will rise and those factors will enable homebuyers to pay higher mortgage costs.

But if the decline in the housing market is severe, it could suck the wind out of the rest of the economy.

Some regions will fare better than others.

Markets with growing populations and job growth may barely notice a rate hike. The prospect of one hardly fazes Steven Alloy, the president of Stanley Martin Companies, which builds about 300 homes a year in the Virginia suburbs.

Even if mortgage rates rise sharply, he said, "you really can't turn the tide of demographics and job growth."

Still, the economy risks losing what's been a significant support when mortgage rates rise, and no one can be sure where and how the impact would be felt anymore than stock analysts accurately predicted the market crash that began four years ago this month.

Housing helped keep the economy afloat through the post-1990s slowdown. When interest rates rise, those supports for the economy will fade. The question is whether job and income growth will be healthy enough to make up the difference.