An increasing number of purchasers in the current tidal wave of home buying are people taking advantage of the lowest interest rates in years to buy bigger and better houses, according to Washington-area builders and real estate agents.

Several residential builders and sales agents estimated that so-called move-up buyers account for 65 percent or more of their sales. Sharply escalating prices are pushing some first-time buyers out of the market, leaving more affluent second- or third-time purchasers to make up an even larger share of the business, several industry experts said.

For most owners who wanted a larger or more luxurious house, plunging interest rates made the purchases possible.

Lower interest rates tipped the scales for Bethesda resident Leslie Taylor and her husband, she said. They were "leaning toward adding on" to their current home as a way to provide more space for themselves and their two growing children until rates dropped low enough to make buying an alternative.

The couple has just signed a contract for a five-bedroom, three-bathroom house with a swimming pool, two miles from their present home, she said.

Even homeowners who did not expect to move again are changing their minds as they see their money "would buy more house than it would a year ago," said James M. Merrion, president of Coldwell Banker residential real estate services here.

A Montgomery County real estate sales agent sold a more luxurious house recently to a couple in their late 50s, who had lived in their old house for 20 years. When interest rates dropped so low they could afford a more expensive house, the couple decided they could not pass up the opportunity, said agent Barbara Stone of the Shannon & Luchs Co.

Others find they now can afford houses they never expected to be within their reach. Developer Griff Gosnell, whose company builds houses in the $400,000 to $600,000 price bracket, said he recently sold a home to a couple who six months ago could not have met the income requirements to get a loan for the house. "This is very unusual," he said. "In this price range, you're usually not talking about whether buyers can qualify for loans."

The booming real estate market, with prospective purchasers elbowing each other out of the way to buy their dream houses, is fueling dramatic price increases in the Washington area, according to builders and sales agents.

Stone estimated that home prices in the Silver Spring and White Oak area where she works have risen by about $10,000 since early March. Other sales agents and builders reported similar price increases in other parts of the metropolitan area in recent months.

Merrion said prices now "are going up faster than interest rates are going down."

Mortgage interest rates ranged from 9 1/2 percent to 10 1/4 percent this week, major lenders reported, and some analysts predict the decline will continue. "We ought to see rates for 30-year fixed-rate mortgages at 9 percent within the next few months," said Barbara Alexander, who follows the housing industry for Salomon Bros. Inc., a major Wall Street investment firm.

Even with lower rates, few buyers will get bigger houses for the same size payments they made on their former homes. Most are purchasing houses in a higher-priced bracket, said Barbara Peet, sales manager of Dale Denton Real Estate's Chevy Chase office. Typically, owners who sell houses in the $150,000-to-$170,000 range look for their next home in the $250,000 bracket, she said.

An Arlington move-up buyer, who asked not to be named, said her monthly mortgage payments will more than triple, going from about $500 to $1,700, when the family completes the purchase. "Without low interest rates, we probably would not have bought now. We might have groused about our current house but we would have stayed put," she said.

Price jumps are being reported in most parts of the country, increasing by 6 percent to 7 percent, twice the rate of inflation, according to Michael Sumichrast, chief economist for the National Association of Home Builders, a trade group. "We are pricing ourselves out of the market for the lowest level of potential buyers," he said.

Increases in the cost of land and construction materials, along with builders' attempts to "recapture" losses they suffered in the early 1980s when high interest rates kept down sales, are driving up home prices, Sumichrast said. Lumber costs have gone up by 25 percent in the past five weeks, as suppliers take advantage of the spring construction and renovation boom, he said.

Houses also are getting bigger, according to Sumichrast. Builders who scaled back on their houses to make them more affordable during the recession have been adding about 70 square feet annually to the average house during the past two years, Sumichrast said.

A bigger house is what many move-up buyers want, and for many couples the "dream house" is a four-bedroom, 2 1/2-bath colonial with basement on a big lot, said Kathie Eaton, a sales agent in Shannon & Luchs' Vienna office. Many prospective buyers can pay from $150,000 to $180,000, but the dream homes in this price range are hard to find in the Vienna area, she said. "There aren't many in the computer lists of houses for sale and they don't last long."

"Empty nesters," older couples whose children have grown up and left home, are a group of move-up purchasers who are looking for more luxurious homes, although they do not want to move to homes that are smaller than the ones they are leaving. These couples make up a significant portion of C. I. Mitchell & Best Co.'s buyers, said Robert A. Mitchell, president of the company. About 20 percent are two-income couples in their second-marriages "who want to move up in life style, not necessarily in size," he said.

Large town houses in the $205,000-to-$235,000 price range, with plenty of space, touches of luxury and very little, if any, yard to maintain appeal to the empty-nest buyers, Mitchell said.

One couple nearing retirement had a different goal when they decided to sell the house they've owned for 30 years, and buy another with one more bedroom, one more bath and a larger kitchen. "We wanted a bigger house so our grandchildren can come to visit," said Marian Henschen. She and her husband are leaving their rambler in White Oak to move to another rambler eight miles away, she said.

While the District of Columbia's move-up sales are slower-paced than in the suburban market, they are brisker than in past years, thanks in part to a growing number of buyers who are leaving the suburbs for the city, according to David Strachan, executive vice president of the D. C. Association of Realtors.

"People see a house in the District as moving up. There's a whole 'Yuppie' trend that has led people to believe that if they're not living in the city, they're not alive," he said.

Most of the D.C. move-up buyers, however, are District homeowners who want to stay in the city, said Peet. Often they are moving from condominiums in urban areas of the city "to what they consider the suburbs -- upper Northwest. They are moving from a Capitol Hill condo, for example, to a detached home or row home."

Even the District's long-dormant condominium market has come to life, enabling owners to sell them for enough money to buy another home, she said.