Despite predictions of overbuilding of residential and commercial properties this year, construction and real estate sales have continued an upward march.

Neither the somber pattern of rising construction costs and interest rates nor a flurry of temporary concern over the availability of mortgage money have dampened the market in this booming area.

Simply, evidence abounds that both individual and associated investors continue to regard real estate investment - from individual dwellings to mammoth complexes - as prime hedges against inflation, a means of ameliorating personal and corporate taxes and even a source of some monthly cash flow.

As predicted, new home prices have been escalating this year at an annual rate of about 15 percent. And the pace of residential construction has kept up with predictions: Approximately 28,000 units are expected to be begun here this year.

Some observers had felt that price increases here might turn buyers off. There was a hiatus in both new home and resale house buying in late June and early July, after a torrid spring selling season. But the market rebounded during late July and August, when hot weather usually discourages buyers.

Meanwhile, interest rates rose from a level of about 9 1/4 percent at the beginning of the year to an average that neared 10 percent this summer. That upward trend seems to have leveled off, and there is even some reason to believe that a slight fallback in mortgage rates can be expected before any snow falls.

Although lending institutions were turning away some prospective borrowers just a few months ago, most now are ready and willing to talk about new mortgage loans.

In the home construction field, builders have continued to face some material shortages and price increases in products such as wallboard, concrete and trim materials. And the high level of building also has caused sporadic shortages of both skilled and unskilled labor. As a result, some dwellings scheduled for delivery in June won't be ready until later this month. And the waiting purchasers have had to change their own selling and moving plans - and even accept mortgage interest rate increases in the interim.

While the influence of the Metro subway system on a heavy commercial construction has waned, office building and other commercial construction remain strong, particularly in the downtown area. Most of the new office buildings are partially leased before construction starts, and those in top locations are often nearly 100 percent leased when the doors are opened. Leasing retail and commercial space, which in some prime locations can be in the range of $40 a square foot, is a slower process.

Most office space professionals see a market for nearly 2 million square feet of new office space in downtown annually and at least another million in suburban areas, which tend to lease slower and have higher vacancy rates. But the overall vancany ratio in this area of less than 3 percent is one of the lowest in the nation. Much of the vacant space is often in the less expensive category of small, older buildings in areas no longer considered prime.

In Washington most prime locations are measured from the adjacency to or distance from the heartbeat corners of Connecticut Avenue and L and K streets NW, an area highly vital for years and now buttressed by Metro stops. From Connecticut, the surge has been westward toward Georgetown and Rock Creek Park in the past two decades. But now that area is coming up short on redevelopable ground.

Apartment construction remains the slow part of the area realty field, but mainly in moderately priced garden apartments in the private market. New high-rises are being started or planned for both the well-to-do and for the low- to moderate-income elderly and handicapped.

High interest rates and construction starts discourage most builders from the private rental market in the midrange, but they use government assistance to create new housing for those who are eligible for subsidies. And now confidence is returning in regard to a market for fairly large, expensive apartments - renting for more than $1,000 a month - for people who can afford to buy houses but prefer to live in prestigious apartments.

Will the Washington area's current housing and construction boom cool? The jury is out (and many never return) on that question. But there are no immediate signs of a downward trend.