"SOME ARTIFACT or some development, seemingly new and desirable--tulips in Holland, gold in Louisiana, real estate in Florida . . .--captures the financial mind. . . . The price of the object of speculation goes up. . . . This increase and the prospect attract new buyers; the new buyers assure a further increase. Yet more are attracted . . . ". So economist John Kenneth Galbraith writes in his "Short History of Financial Euphoria."

That, worry many observers, describes America's housing market. Stories of people buying condominiums in the morning, and selling them for a substantial profit later in the day, enliven the financial press. Cocktails parties are made merrier by the game of "whose-house-has-increased-the-most-in-value." Surely we are witnessing the final stages of a house-price bubble.

Well, not so surely. Perhaps we are seeing only "a little froth in the market," to borrow the phrase used by Federal Reserve Board Chairman Alan Greenspan in his recent speech to the Economic Club of New York. The man who is famous for saying that if anyone understands what I am saying, I must have misspoken, handed down this model of clarity, "Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern." Froth, it seems, consists of "a lot of local bubbles." Meaning: In some areas prices are due to come down, but there will be no nationwide collapse in house prices.

So spoke the man who finds it a "conundrum" that his repeated increases in short-term interest rates

Last month, sales of existing homes rose 4.5 percent, and single-family homes commanded a median price of $203,800, a jump of 15 percent in the past year. That's the fastest rate at which prices have increased since 1979. New homes are also selling at a torrid pace: sales in April were up 13.3 percent over last year, and the median price rose by 3.8 percent. Little wonder that builders increased privately-owned housing starts by 11 percent in April from the March levels, and stepped up their applications for permits to build still more homes.

What worries some analysts is not only the speed with which prices have been rising, but the way Americans have suddenly begun financing their purchases. Until recently, the typical buyer sought a fixed-rate, 30-year mortgage that set total monthly payments at an unchanging, predictable, and affordable level.

Times have changed. More and more Americans--two-thirds of new buyers, by one estimate--are opting for variable rate mortgages, or choosing to pay only the interest due in the early years, leaving repayment of the loan for a later date.

This stores up two kinds of trouble. First, if interest rates rise, so will the required monthly payments. Second, after the first five years, the borrower must start to repay the principal, which just about doubles his monthly payments. Unless, of course, an increase in the value of his house allows him to obtain a new, interest-only mortgage.