The buying, building and selling of houses, depressed for at least a year beneath the sheer weight of mounting interest rates, appears to be sliding into virtually unprecedented economic decline.

The high cost of borrowing money already has swept most Washington-area residents out of the housing market for the foreseeable future. Bankruptcies among builders are on the increase, housing starts are down, entire subdivisions are standing idle and virtually no mortgage loans are being made at the current market rate of more than 19 percent.

Instead, builders, developers and most average homeowners have been forced to do what the bankers cannot, which is to subsidize mortgage loans for their buyers with thousands of dollars out of their own pockets. But most housing professionals say these people already have strained their resources to the limit, raising the specter of collapse for a major segment of both the local and national economy.

"I can't tell you how many builders aren't building, Realtors aren't selling, title companies aren't closing," said William F. Sinclair, president of Perpetual American Savings and Loan, the area's largest, which just laid off 38 loan officers because there wasn't anything for them to do.

At a recent meeting in Boston, Michael Sumichrast, chief economist of the National Association of Home Builders, advised the 1,700 members of his board to get out of the home-building business, at least for the next six months. "The bottom line is a disaster," Sumichrast, an acknowledged pessimist, said in an interview. "We're in trouble. We're in deep trouble."

The mortgage squeeze has taken its toll on thousands of people like Wendy Abraham. The young Silver Spring woman said that when she and her husband, Richard, decided to have a child, they effectively forfeited their chance to buy a house.

"It's just horrible," she said. "Does it have to be a tossup between having a house and having a child?"

There are pockets of optimism. Federal Housing Commissioner Philip D. Winn, the Reagan administration's chief housing spokesman, insists, for example, that the industry is a cyclical one that will bounce back. "There is not a housing crisis today," he said in an interview. "My crystal ball tells me we can look for a real drop in interest rates by the spring of '82." He said he meant rates would be "in the area of 14 or 15 percent."

But Herman J. Smith, a Fort Worth developer who is president of the 123,000-member home builders' association, responded to Winn's prediction by saying: "That rate would be a disaster for 93 percent of the home buyers in America today."

Moreover, the Reagan administration's tight money policies have convinced many bankers and builders that interest rates will not fall for at least another year. By then, they reason, many more businesses will go broke.

While mortgage money is scarce, there is no shortage of depressing statistics:

The number of new single-family homes sold in the Washington area dropped from 5,168 in the first eight months of 1979 to 3,638 for the same period this year, according to Housing Data Reports, a local market research firm. The biggest dry spell came in the months of July and August, as sales of all new homes, town houses and condominiums fell from 5,054 last year to 2,677 this year.

Resales of existing homes in the area fell from a peak of 37,302 for the first eight months of 1978 to 22,101 for the same period this year, a 41 percent decline. In August alone, there were just slightly more than half as many resales as in August 1979, a fall from 4,371 to 2,357.

The supply of unsold condominium apartments here jumped from 2,710 units in June 1980 to 6,250 last June, a major backlog in what was once the area's hottest-selling commodity. In the District alone, the number of new condos brought on the market each month dropped from 412 last year to 121 this year.

Perpetual American was processing 76 new mortgages last month, compared with 350 in June 1979. The total amount of mortgage money loaned by Perpetual has plummeted from $209 million in 1979 to $48 million so far this year.

New mortgage commitments made by savings and loan firms throughout the country in the first eight months of 1981 were down by nearly $7 billion compared with the same period last year.

Nationally, new home sales are down to an annual rate of 420,000 units, or only one-half of a good housing year.

Housing starts in August plunged 34 percent compared with the same period last year, the third lowest level since World War II. This dropped the annual figure for new construction to 937,000 units, the first time this year that housing starts have slipped below the psychological benchmark of one million a year.

Home builders already are going broke at an unprecedented rate: In August alone, there was a 42 percent increase in bankruptcies and a 53 percent increase in business failures.

These developments have chilled the long-overheated Washington real estate market, as the success stories that filled the cocktail party circuit in the mid-1970s have given way to tales of woe and frustration. The average value of local properties increased just 6 percent last year -- and actually decreased in some parts of the city -- a far cry from the double-digit appreciation rates that once made real estate such an irresistible proposition for so many.

But it is the personal impact of the mortgage squeeze that often is most telling.

Jack Meyerson, 34, has been trying to sell his three-bedroom Capitol Hill town house for more than a year. But although he has offered to provide some of the financing himself and has gradually dropped the price -- from $245,000 to $237,500, then to $227,500 and finally to $219,500 -- no one has offered to buy it.

"This whole thing has prevented me from moving forward with my life," said Meyerson, who has since moved to Philadelphia to join a law firm there. "At the interest rate I bought the house for 10 3/4 percent , a couple with two good salaries from government jobs could have afforded it. Now they couldn't handle it."

Six weeks ago Meyerson gave up, pulled the house off the market and rented it out. Then he and his wife bought a far more modest town house in Philadelphia than they had originally planned.

"Because we couldn't sell the house in D.C., we ended up living in an apartment far longer than we wanted to, and we weren't able to buy the kind of large house here that we could live in for 20 years," he said. "It's a real pain in the neck having all your equity tied up."

Stanley and Ann Hamilton started packing their prized china and crystal last December when they found a buyer for their 71-year-old row house on Cathedral Avenue NW. Hamilton, executive director of the American Trucking Association, then signed a contract for a model home in Fairfax County to be closer to his office, which was moving to Virginia.

But the wealthy consultant who arranged to buy their home lost his financing, and Hamilton was forced to back out of the Virginia deal. Over the next few months, Hamilton signed three more contracts for his five-bedroom rambler, only to have one buyer drop out and the other two rejected by the banks.

The discouraged lobbyist dropped his price from $225,000 to $200,000, offered a third trust himself at 15 percent interest, and finally sold the house last week. "We consumed a few bottles of booze that night," said Hamilton, who now has two months to find a house in Virginia. "We just didn't want to get excited about a new house and have it fall through again."

Some people can't afford to wait. Charlotte Hall thought her housing troubles were over in June when she sold her house in Springfield and bought a much larger four-bedroom home in a newly evolving subdivision in Burke. But she lost her job when The Washington Star folded, has been forced to move out of town and is scrambling to sell her house in a far more depressed market than the one she encountered just three months ago.

"The only people who are trying to sell a house in this market are crazy," said the young newspaper editor, who is moving with her husband and their 5-year-old son to take a job at Newsday, but doesn't know whether she can buy a house in Long Island. "Our house has been on the market for five weeks and no one is looking. My real estate agent told me everyone is sitting around her office waiting for the phone to ring."

The builder at Hall's Southport development, Costain of Washington Inc., is facing a similar dilemma: trying to unload 14 of the 35 houses built so far in the $150,000 range. These houses are intended for the broad range of middle-class buyers who until recently formed the backbone of Washington's lucrative housing market. But it is these people who have, for the first time, been priced out of the market.

"It's the people in the middle of the market who are suffering, the great middle class," said Sinclair, the aggressive, 35-year-old president at Perpetual. "The guy in Fairfax with a wife and three kids who wants to buy a $175,000 house, he can't qualify. He's working, his wife is working and they're not making it."

The danger signs are everywhere:

A sales agent with one of the area's largest and most successful condominium developers was shocked to find that her paycheck bounced a few weeks ago.

Long and Foster, one of the area's largest realty firms, reports that its sales in August dropped 17 percent from the same period last year. "We're staying alive through creative financing," said P. Wesley Foster, the firm's president. "If not for that, we'd be flat out of business. It would be a nightmare."

"There's never been a time when so many houses stayed on the market for so long," said Wally Adamson, a manager with the Shannon and Luchs realty firm. "On Sundays these people used to be out looking. There's a fear psychosis out there."

Some realty agents, brushing aside the latest statistics, insist that this is actually the best time to find bargains. "The high interest rates also make it a good time to buy a home because you're not paying full market price," said Helen Hubbell, regional vice president for Merrill Lynch Realty-Chris Coile Inc. "If interest rates do drop, the market's going to be unbelievable and we'll probably have a big increase in the price of homes."

Others are not as sanguine. Twenty-three years ago, Phyllis Tobin became the first sales person at Sterling Radcliffe Real Estate in Olney. Now she is the last remaining partner and is closing down the company.

The latest downturn convinced her two partners they could make more money in other lines of work. One is going into advertising, the other becoming a manager for a large corporation.

"If the market had been booming, I could have attracted a new sales manager and new salesmen," Tobin said. "But I didn't want to do it all myself. I can go work for another company with fewer headaches."

As the breadwinner for her large family, Tobin tried to keep the firm going, even as her own sales dropped by more than half. "Now when you get a customer, you put your hand around his neck and put your foot on his chest and sell him something," she said. But even this aggressive attitude failed to halt the downslide.

"I've seen any number of bankruptcies and I'm sure more are just around the corner," said Edward R. Carr, a developer with 12 subdivisions in Northern Virginia, who is not replacing his employes as they leave. "If this kind of market continues for another six months, I'm sure there'll be a real spate of failures."

Some builders already have run out of rope. Chet Cowan has survived several economic downturns during his 20 years as a Washington builder, "but this is absolutely the worst one -- no comparison." Now his firm, Cowan and Hodgkins, has filed for bankruptcy.

Cowan was in the midst of developing a 49-lot subdivision near Potomac when his luck ran out. "We ran into a cash-flow problem," he said. "When you're paying 2 percent over prime on construction loans, you've got to move a lot of houses fast."

In the current climate, it's little wonder that many homeowners are becoming reluctant landlords. After trying to sell their three-bedroom house on Constitution Avenue NE for a year and a half, Frank and Judy Prunella decided to move out and rent the place to a White House aide who came to town with the Reagan administration.

The White House staffer liked the house so much he decided to buy it, but as the long-awaited settlement grew closer, he found that he couldn't sell the condominium he left behind in California and had to back out of the deal. He is still renting the $135,000 house, and the Prunellas are still trying to sell it.

"It's really the pits," Judy Prunella said. "It's hard to get anyone into the house because people have been scared off. The rent doesn't even come close to covering our payments."

As the damage to the housing industry intensifies, businesses and services tied to housing are feeling the impact in growing numbers. And few expect any relief until, or unless, mortgage rates drop appreciably.

David M. Jones, a respected investment economist in New York, says that while the housing industry is resilient and can recover, it is likely to remain depressed through all of 1982.

"The mortgage market as we knew it is, essentially, dead," he said. "The 30-year, fixed-rate mortgage has burned many savings and loan institutions to death. It's got to be replaced by the variable rate mortgage. The golden age of housing was the '70s. The '80s will be impaired by major shifts in the forms of financing."

And what does all this mean for those who still hope to have a home of their own?

"Young couples are going to have to live with Mommy and Daddy a little longer," Jones said. "Their dream of moving into that cute little cottage, all freshly painted, carpeted and furnished, is going to be put off. Mom, apple pie and housing made this country tick for years. No more."