As small-volume builders of $175,000 houses go, Henry Lilly may be a typical victim of this winter's less-than-buoyant housing market.

To stay in business, the 38-year-old Montgomery County builder must sell at least one of the four houses he is completing in Fairland Estates, just beyond the White Oak area of Silver Spring, by spring.

"I have to believe these houses will be sold, without sacrificing them," Lilly said. "But holding them unsold is costing me about $1,600 each a month. So far, I'm able to live and to keep my bills and loans current -- as the result of selling two houses about a year ago."

Lilly said he knows a number of homebuilders who face the same problems.

A former football coach at Gonzaga High School who studied liberal arts and business at the University of Maryland, Lilly recognizes the effects of the economic doldrums and high interest rates on his small business, which is based in Burtonsville. His construction financing is tied to 2 percentage points above the prime rate, but at the same time, many house shoppers back away from 13 percent permanent financing.

"October and early November were tough in this business," he said. "Some prospective buyers have returned, but they all have houses to sell and some want me to give them my houses.

"I can't do that, because I have based my business on providing a large, good house for a family. Earlier I had raised my price for the basic house but then I lowered it to $175,000 again. That's as fas as I can go."

Lilly and others who build only a few expensive houses a year depend on their reputations and feel for the market to satisfy buyers.

Lilly is out on Bridgewater Drive every day to take care of his houses, three of which are nearly completed. The fourth is under roof and framed.

It's lonely on Bridgewater Drive, these days, however. Until he gets the houses under contract, Lilly has stopped most of the work to hold down costs. "This is my life," he says, "and I still love it."

After winning acclaim as a young football coach at Gonzaga, Lilly decided about 11 years ago to "do something more lucrative in a field where my ability to direct and motivate people would be useful.I had worked summers in construction and liked work in the field."

Lilly went to work for the Carl. M. Freeman home-building company, moved on to the Mathews-Phillips firm in Columbia and then to George Hyman Construction Co., where he worked as an assistant superintendent and then a superintendent. A stint in construction management with Blake Construction followed.

By 1973, Lilly was eager to go on his own.He built a few houses in Maryland and Virginia before running smack into the housing depression of 1974-75.

"I lost four houses to the lender and returned to construction management at the Baltimore-Washington Airport improvement project, working for the Ralph M. Parsons Co.," Lilly said. "But early in 1978 I got the urge to build again on my own." He bought some lots and began building houses in Fairland Estates, which is off Fairland Road west of Rte. 29.

Architect Michael Patterson designed the houses Lilly is building now. They have center hall entrances, four bedrooms and two fireplaces. Two similar houses were sold a year ago, but there have been no buyers since then.

Lilly concedes that his houses are larger and more expensive that most in the Fairland Estates area, a community of homes on half-acre lots that was developed by Wallace and Devonna Malcolm.

"I may have overbuilt slightly for the area, but it's still a good value for the buyer," Lilly said.

All small contractors in the residential business depend on their construction financing to keep going, Lilly pointed out, but carrying charges become excessive when the prime rate skyrockets.

"All small builders face these problems," he said. "It's difficult to be adequatelycapitalized to insure staying power when the market turns soft for a while."

One of those builders, who asked that his name not be used, said he cannot survive another 60 days without selling a house. In business for 28 years, he has sometimes survived by the skin of his teeth, the builder said.

He said he currently has four unsold houses in the $250,000-range in the Bethesda-Chevy Chase area. The recession began for him last February, he said.

The fact that he is not alone is slight solace to Lilly. "It's not easy to admit that your houses haven't sold, especially when you take pride in the quality of construction," he said.

But the values are there and construction costs are not going to come down. Larger firms can start new projects and get a draw on their construction loans to stay alive financially but little firms like mine can't afford to sit forever on unsold houses."

Hank Lilly is unusual in that he is willing to talk openly about the problems faced by small-volume builders with expensive, unsold houses. Meanwhile, he and agent Barbara Patterson of Snider Bros. are working with prospective buyers.

"These houses will sell," he insists.