SAN FRANCISCO — Rising interest rates are supposed to be an economic sedative, but the hyperactive real-estate market has retained its vigor even as the prime lending rate has climbed to a nearly four-year high.

One of the biggest reasons for real estate's unusual behavior is that home mortgages are less expensive than they were 14 years ago when the Federal Reserve Board began to push up the short-term cost to borrow money.

That inflation-fighting effort has raised the prime rate from 4 percent in June 2004 to 6.5 percent today, making it more costly to buy cars, appliances and almost anything else on credit.

Meanwhile, home mortgages have remained a relative bargain. The average rate for a 30-year fixed-rate mortgage was 6.05 percent through Thursday, down from 6.41 percent during the first week of June 2004, according to HSH Associates, an industry research firm.

Those low financing costs mean home buyers can qualify for larger loans — a major factor why real-estate prices have continued their steady ascent in neighborhoods scattered across the country.

The trend troubles Federal Reserve Chairman Alan Greenspan and many other economists, who worry that cheap mortgage money is contributing to a real-estate pricing bubble that could trigger a traumatic recession.

"It's very hard to understand the psychology of any market," said UCLA economics professor Edward Leamer. "But it's fundamentally clear that the housing market is in a fragile and dangerous situation."

The risks of a real-estate meltdown aren't the same across the country because mortgages are not the sole factor influencing home prices. Other key considerations include an area's desirability, the supply of available housing and the strength of the local job market.

The housing markets most susceptible to a sharp downturn in prices are in California, Massachusetts and New York, according to PMI Group Inc., a mortgage insurance provider based in Walnut Creek, Calif.

Based on a recently completed analysis, PMI predicted six major metropolitan areas face at least a 50 percent chance of enduring a drop in home prices within the next two years: Boston-Quincy, Mass.; Nassau-Suffolk, NY; San Diego County, Calif.; Santa Clara County, Calif.; Orange County, Calif.; and a two-county area east of San Francisco.

In the nation's 50 biggest markets, the average risk of a price decline during the next two years stands at 21 percent, PMI said.

After years of rapid price appreciation, things appear to be slowing down in some markets such as San Diego County, where a mid-priced home sold for $493,000 in June, more than doubling from $232,000 five years ago, according to DataQuick Information Systems.

But San Diego home prices have gained just 6 percent during the past year, tapering off from the double-digit growth that had prevailed since early 2000, said DataQuick analyst John Karevoll. "We are monitoring San Diego very carefully because that appears to be where other markets might be heading," he said.

Apparently convinced that Boston's real-estate market is nearing its peak, more homeowners there are putting their property up for sale, said real-estate agent Alla Iokhes.

Homeowners are "probably afraid that it's going to get worse next year," she said. "It used to be a seller's market. Now it's gotten to be a buyer's market."

But the double-digit gains in home prices in many other areas continue to fuel demand among buyers looking to make a quick buck. For instance, Florida real-estate agent Eric Sain said an owner who bought a West Palm Beach home for $429,000 six months ago just struck a deal to sell it for more than $570,000.

"The rates on the 30-year mortgage are still good and that's what's propelled home sales," Sain said.

Homeowners who have capitalized on the housing boom by borrowing against their properties are starting to get squeezed by the steady increase in short-term rates. Most home-equity loans carry adjustable rates tied to the prime rate, which is widely expected to surpass 7 percent by year's end as the Federal Reserve continues to clamp down on the economy.

The average rate on a home-equity loan is expected to reach 7.04 percent by the end of this month, up from 4.68 percent in June 2004, according to HSH Associates.

That change is stretching more household budgets because more debt has been shifting to home-equity lines of credit as the real-estate boom creates more wealth. Through March, home-equity borrowing totaled $911.4 billion, up 28 percent from $714.7 billion the previous year, according to Federal Reserve statistics.

The average loan balance outstanding on home-equity lines of credit is about $36,500, according to the most recent statistics released by the Consumers Bankers Association. A borrower owing that much would pay about $70 more per month in interest costs because of the increase in short-term rates since June 2004.

Many home-purchase mortgages also adjust with short-term rates, but some of those changes might not happen until next year — or even beyond. That's because more home buyers have been relying on exotic mortgage loans that lock in a low rate for anywhere from three to seven years and only require interest payments — another phenomenon helping to drive up prices and increasing the risk of a sharp downturn.