The Irish Independent reports that Dutch-owned RaboDirect said yesterday it has attracted 100 millionaires to put money into its deposit and investment products since it started a year ago and now has €700m on deposit.

The online bank said it expects to have €1bn in deposits by the end of this year, according to managing director Greg McAweeney.

Its online account, which pays 3.35pc interest, has attracted almost 13,000 customers, Mr McAweeney said. This was ahead of target, he added.

The bank's deposit account was proving popular because there were no conditions, such as a minimum amount that had to be deposited. Mr McAweeney accused other banks, particularly AIB and Bank of Ireland, of hitting customers with high fees and charges for banking and investment products.

"Our biggest challenge was inertia and it's still our biggest challenge," Mr McAweeney said. The bank has been trying to lure customers by portraying itself as a "straight-talking online bank".

Launched

Yesterday, RaboDirect launched two more investment funds to take to 18 the number of online investment products it offers in Ireland. The bank allows investors to put as little as €100 into funds managed by Merrill Lynch, Henderson Global Investors and Robeco, the bank's own money management unit.

RaboDirect said it had so far attracted some €20m into its investment funds, which it said were among the lowest-cost in the market.

There is an entry and exit fee of 0.75pc with no encashment penalties. Management fees of up to 2pc are built into the price of the funds.

The bank keeps its charges low by offering an execution-only service (ie it does not offer advice on investments) and by using the internet rather than brokers or a direct sales staff.

RaboDirect may offer online personal loans in Ireland later this year with a lower interest rate than rivals, it said.

Personal loans offered by RaboDirect would have to be "more innovative than bog-standard term loans", Mr McAweeney said.

The Irish Independent also reports that Danish taxpayers have been told they cannot have tax cuts, because the government has too much money.

Finance minister Thor Pedersen said he saw "no room" to lower income taxes because of the risk of overheating the booming Danish economy.

"As I see it now, where our economy is testing the limits of its capacity, there is no room for tax cuts," Mr Pedersen said. The Danish economy grew 3.3pc in the final quarter of last year and the Budget surplus hit a record 4.9pc of GDP in 2005. Mr Pedersen intends following the advice of the Bank of Denmark and several economists who have cautioned the government against too loose a fiscal policy which could contribute to overheating the economy.

This is similar to the advice given by the Irish Central Bank and the Economic and Social Research Institute (ESRI) to Finance Minister Brian Cowen. They want a cautious Budget next December, even though it is an election year, for fear of stoking inflation in the Irish economy, which is also growing faster than its capacity, sucking in foreign capital and workers.

However, neither body appears to think that the Irish government will follow the advice. As well as tax cuts, public spending is set to increase by 13pc this year, and more of the same is expected in 2007.

Denmark's Prime Minister Anders Fogh Rasmussen last week unveiled plans to boost government spending on research, training and innovation to help the country's global competitiveness.

The Irish Times reports that the Government will not make a decision on whether to allow Romanians and Bulgarians an automatic right to work here when their countries join the European Union until all other EU states open their labour markets to immigrants from newer member states, the Taoiseach has indicated.

Mr Ahern made his comments as EU officials suggested yesterday that a decision on what date Bulgaria and Romania can join the Union will be postponed.

Speaking to journalists in advance of a keynote speech on the eve of Europe Day, Mr Ahern reiterated his call for seven member states to lift work restrictions on citizens of the 10 accession states that joined the EU in May 2004.

Last week Spain, Portugal, Finland and Greece said they will join Ireland, the UK and Sweden in lifting restrictions on workers from the new EU members. The Netherlands may do so at the end of the year, while France, Belgium, Italy and Luxembourg said they would lift restrictions in sectors of the economy where they had labour shortages. Germany, Austria and Denmark have made it clear they would retain total bans.

Asked about his attitude to allowing Romanians and Bulgarians an automatic right to work in Ireland when their countries join the EU, he said the Government would "look at that carefully at the time".

"We haven't made up our minds yet and as I said recently I'd like to see the other countries doing what we did before we made up our mind on that," he said.

Both Bulgaria and Romania had been expecting a decision by the European Commission next week on whether they are ready to join the EU on January 1st, 2007. But Commission sources said yesterday that enlargement commissioner Olli Rehn is preparing to delay until the autumn a final recommendation on when the states should join.

EU sources said this would give more time to pressure both states to undertake further reforms. The Commission has become increasingly concerned about organised crime in Bulgaria and its failure to bring about reform of its judiciary.

In his speech yesterday evening at Dublin City Hall, Mr Ahern also described the European constitution as "the right choice for Europe" and "the right choice for Ireland".

Speaking to journalists, Mr Ahern said that a date would not be set for an Irish referendum on the constitution until there was clarity about the intentions of France and The Netherlands, who both rejected it. He said that even if either country decided against revisiting the constitution, elements of it would have to be progressed.

In his speech Mr Ahern also attempted to allay the fears of trade unions about the impact of market reforms within Europe. "We want to make sure that our economy remains competitive, flexible and adaptable in the face of huge international pressures," he said. "But this does not mean that we will sacrifice our fundamental social values on the altar of economic efficiency."

In a statement announcing the sixth report of the Forum on Europe had been delivered to TDs and senators, its chairman Senator Maurice Hayes said migration was a topic raised at the forum. "The number of people from abroad arriving into Ireland was not seen to be a problem...Nonetheless, fears of job displacement, and cases where the minimum wage was not paid, were highlighted," he said. He added that many were concerned at the impact of the proposed Services Directives, but many of these concerns had been addressed by the European Parliament.

The Irish Times also reports that the Eircom employee share ownership trust (Esot) is exploring the possibility of increasing its 21.5 per cent stake in the former State telco after a €2.36 billion takeover led by the Australian investment fund Babcock & Brown, according to informed sources.

The sources believe the Esot would like to bring its stake in the company close to the 30 per cent level it held after Sir Anthony O'Reilly's Valentia consortium took the company private in 2002. Under the valuation mooted by the Australians, the purchase of an additional 8.5 per cent stake in the company would cost some €200.6 million.

It is unclear at present how the Esot would fund such a purchase, an issue that will be central to the deliberations of the trust and its 12,000 members.

It is considered unlikely that Babcock & Brown would be opposed in principle to the notion of the Esot taking a greater stake in the takeover vehicle. That would remove a potential obstacle if a structure satisfactory to the Australians could be developed. However, the dialogue between the two sides is thought not to have reached that point yet.

The Esot chairman, Con Scanlon, and spokespeople for the trust, did not return calls last evening. A due diligence exercise, embracing a detailed examination of the telco's books and presentations by key executives in Eircom's individual business units, has been under way for a fortnight. No surprises have emerged so far but a formal bid from the Australians and the Esot is not expected for some weeks yet.

Any move to increase the Esot's stake would be in line with its manoeuvres at the time of the Valentia transaction, when Sir Anthony's consortium prevailed over a rival bid from Esat founder Denis O'Brien. Then, the Esot doubled its stake to 30 per cent as its price for supporting the Valentia proposal.

The trust's stake was reduced to 21.5 per cent when Eircom was floated for a second time in 2004.

Not only would a move to increase the trust's stake protect its position after the change of ownership that is now increasingly likely, but it would also put the Esot's members in line for a higher share of the company's dividends.

Crucial here is the fact that the Esot's tax-efficient structure must wind down within three years. With Esot members facing greater exposure to tax on the their investment in the medium-term, the trust may choose to lessen that blow by taking a higher stake in Eircom in order to provide members with a greater share of the overall income from the company.

Such issues, too, will be central to any advanced debate on a funding mechanism.

Under the original approach to Eircom from the Australians and the Esot, the trust's stake was to hold steady at 21.5 per cent.

This was to be achieved by putting the Esot's preference shares, worth €140-€180 million, into the bidding vehicle. In place of these, the Esot was to receive ordinary shares commanding 21.5 per cent of the bidding vehicle.

At the same time, the Esot was to exchange its €507 million worth of ordinary shares - comprising its current 21.5 per cent stake in Eircom - for preference shares guaranteed by Babcock & Brown's banks. Such guarantees meant the deal would carry no risk for Esot, while the overall structure would minimise its tax bill.

The Irish Examiner reports that the Government is considering introducing means-tested mortgage supports to help low-earners buy their own homes in the private property market.

Social Affairs Minister Seamus Brennan has asked his officials to investigate ways of helping limited-income families to get a foothold on the property ladder outside of the social and affordable housing schemes run by the Department of the Environment.

“I have asked my department to look at it. I have asked whether in some cases we might be able to help, for example, young people with support for mortgages,” he said.

“I don’t want to start a major scheme because half the country would like support with their mortgages. You would have to means-test it.”

The minister said he expected a report back from his officials in the next few months. Mr Brennan’s comments come as he awaits publication of a report by the public expenditure watchdog, the Comptroller and Auditor General, on his department’s escalating spending on rent supplement for tenants renting from private landlords.

In the last five years, the number of tenants receiving rent supplement increased by 41% while the cost of supplementing their accommodation rocketed by 144%.

There are now 60,176 tenants receiving supplements to help pay their rent, compared to 42,683 five years ago, while the cost of the scheme grew from €151 million to €368.5m over the same period.

Comptroller John Purcell is expected to say that the rent supplement scheme has strayed far from its intended purpose as an emergency support for renters and that it benefits private landlords while doing nothing to fulfil the State’s responsibility to provide permanent social and affordable housing.

Mr Brennan said he had no issue with the Comptroller.

“One figure that always amazes me is that 40% of the private rented market is accounted for by tenants on rent supplement. The State is too dominant in the rental market. That’s not the answer. The answer is to provide permanent social housing for people and help people with mortgages,” he said.

Aideen Hayden, chairperson of Threshold, the national housing organisation, criticised the pace with which the Government was pursuing its social and affordable housing programmes. Some 6,500 social housing units were built last year but Ms Hayden said the minimum required was 10,000 per year.

She said she feared the rent supplement programme would be cut without any corresponding increase in housing provision.

A Government plan announced in 2004 to replace rent supplements with accommodation leased long-term by local authorities from private landlords has so far seen just 1,004 tenants re-housed, but Mr Brennan said that number would increase dramatically in the next few years.

He said his target was to reduce the number of rent supplement recipients to about 20,000 which was the estimated number who, at any given time, would need short-term help with their rent during periods of unemployment or illness.

The Financial Times reports that the European Union’s economic recovery will gather pace this year, reducing unemployment and government deficits the European Commission forecast on Monday.

The brighter outlook will be marred, however, by persisent “structural weakness” in Italy, despite the global upswing, and the failure of Italy and France to rein in excessive budget deficits.

The Commission predicted growth in the EU economy of 2.3 per cent this year, significantly up from the 1.6 per cent in 2005, and higher than the 2.1 per cent previously forecast by Brussels.

But Joaquín Almunia, the EU economic and monetary affairs commissioner, warn-ed: “Growing at, or slightly above, potential is not enough and some countries are far from exploiting their full potential. Europe must pursue the path of reforms, correct budgetary imbalances where they exist and make room for expenditure on research and development, innovation and education where it is most needed.”

He added: “Only this way will the unemployment rate come down further.”

EU growth would also continue to lag significantly behind the rest of the world, according to the Commission’s spring economic forecast. Jean-Claude Trichet, European Central Bank president, said after a meeting of central bankers in Basle, Switzerland, that the world had seen “an exceptional period” of growth – and warned that inflation risks had to be tackled at the global as well as national level. The ECB started lifting its main interest rate in December.

Italy’s position as the “sick man” of Europe was confirmed in the Commission’s report. After having stagnated in 2005, the Commission expected the country’s economy to grow by 1.3 per cent this year, slowing to 1.2 per cent in 2007. Rome is also certain to come under heightened pressure from Brussels over its government deficit, which is projected to rise from 4.1 per cent of gross domestic product this year to 4.5 per cent in 2007.

Under EU fiscal rules, countries must keep their public deficits below 3 per cent of GDP.

France’s deficit was also expected to rise, from 3 per cent this year to 3.1 per cent in 2007. The forecast prompted Mr Almunia to call on Paris to adopt “new measures in next year’s budget” to bring the deficit back below the 3 per cent threshold.

The overall improvement in the region’s economic prospects this year comes thanks to continuing strong investments by the private sector, export growth and the recent pick-up in Germany, the Commission said.

Brussels expects Germany to be responsible for a slight decrease in EU economic growth to 2.2 per cent in 2007. A planned increase in German value added tax by three percentage points next year is expected to push much private spending into the last quarter of this year.

However, the Commission argued that “the projected slight slowdown in 2007 does not imply a weakening of the underlying growth momentum”. It added that higher European interest rates were “not expected to have a significant impact on economic growth in 2006 and 2007, given the momentum of the recovery”.

The FT also reports that to listen to many commentators you might imagine that the US economy is going through a rough time. High petrol prices, outsourcing of jobs and concerns over a slowdown in the housing market dominate the headlines.

But as the Fed prepares to meet on Wednesday to decide on interest rates, the US economy appears to be in excellent health. In fact, as the stream of positive figures continues to flow, it is starting to resemble the fabled Goldilocks period of the late 1990s (not too “hot” or too “cold” an economy).

The combination of strong growth and low inflation has been as good as anything seen since the 1960s, with the sole exception of the explosive growth of the late 1990s. The economy is on track to grow by about 3.5 per cent for the second consecutive year – close to the level economists view as the speed limit before inflation starts to rise. The core inflation rate has remained remarkably subdued despite the upward pressures ex-pected from surging oil prices. Wage growth may have struggled to keep pace with inflation, but soaring house prices have more than made up for this shortfall for the two-thirds of the population that own their own homes.

US economists have been suitably impressed. The last of the pessimists, Stephen Roach of Morgan Stanley, recently started to strike a brighter tone.

But the public has remain-ed sceptical. The latest Michigan consumer sentiment index suggested that Americans continue to fret about the immediate future. The index level at 87.7 is well below the levels from 1997 to 2000 when it hovered between 100 and 110.

So with the economy in such excellent form, what is troubling Americans?

Growth may be strong but it pales compared with the late 1990s’ upswing. Between 1997, 1998 and 1999, economic growth never fell below 4 per cent. Although growth surpassed 4 per cent in 2004, it has settled back to a more sedate pace of about 3.5 per cent.

Strong growth has also owed much more this time to higher debt and lower savings. During the late 1990s’ boom the savings rate dropped from 3.6 per cent to 2.4 per cent. In the past three years it has fallen more steeply from 2.1 per cent to minus 0.5 per cent.

“We are seeing a type of collapse anxiety,” says Greg Easterbrook, a scholar at the Brookings Institution and author of the Progress Paradox. “Things look good now but people are worried that the economic conditions are not sustainable.”

Perhaps the main reason for the lack of a feelgood factor has been the failure of wages to keep pace with inflation. Between 1997 and 2000 real average hourly earnings rose by an average of 1.5 per cent a year. Since January 2004 they have been falling by 0.6 per cent year on year, mainly through higher fuel prices.

Companies have done a good job of grabbing the spoils of economic growth over the past few years, without passing much on to workers, while the cost of living has been rising slightly faster. During the goldilocks period of 1997 to 2000 headline inflation averaged 2.4 per cent a year. Since the start of 2004 it has averaged 3.1 per cent.

For many workers weak wage growth’s effect on spending power has been more than offset by the strong property market. House prices rose by 5.2 per cent a year on average between 1997 and 2000 and have climbed by an average of 12 per cent since 2000.

In real terms, Americans are also wealthier now than at the peak of the late 1990s boom. The real net wealth of households has climbed from $41,300bn at the end of 2000 to $46,300bn (€36,400bn, £24,900bn) at the end of 2005.

But rising levels of wealth are being overshadowed by concerns that the halcyon days of the housing market may be ending. So far, the slowdown has been tentative. Nevertheless, there is strong evidence that the market is cooling.

“The economy may have been doing very well,” says Paul Ashworth, an analyst at Capital Economics. “But it is small wonder that there has been less euphoria this time around.”

The New York Times reports that many Americans who planned on real estate as their path to wealth are beginning to find that there are limits to how high is up.

Blame market forces. As higher interest rates dampen demand in cities and suburbs that only a year ago were battlegrounds for fierce bidding wars among numerous buyers, sellers are grudgingly lowering their prices to drum up interest.

A house at 57 Marina Boulevard in San Rafael, across the bay from San Francisco, was originally listed at $1.45 million. The owner recently dropped the price to $949,000 when a competing house on the same street lowered its price to $959,000, from $989,000. In Marin County, the prices of about a quarter of all listings have been reduced. County records show that 57 Marina Boulevard was sold in February for $700,000, so the owner, Dan Marr, is unlikely to lose money even at the lower price, though he may not make as much as he had hoped. "I don't want to talk about it," he said.

It is getting tough out there for sellers. What is happening in Marin County is being repeated in cities and suburbs across the United States. Nearly a year after the sales of homes peaked, buyers are wresting control from sellers in many areas as inventories of unsold homes have grown, in some markets doubling. Few people are losing money after the run-up in housing prices in the last 10 years, but the air is coming out of the market.

It is a slow leak, to be sure. The most widely used statistic to measure home values, the median home price, shows that once-hot markets like San Mateo, Calif., and Mercer County, N.J., are now registering year-over-year declines. In general, prices are still climbing, but they are doing so far more slowly in cities like Las Vegas and San Diego, which had been lucrative markets for speculators.

"It's going from a seller's market to a buyer's market," said David Lereah, the chief economist for the National Association of Realtors. In March, "price appreciation went down to 7.4 percent, from over 10 percent," he added. "That most probably reflects that sellers are bringing their prices down."

As always, real estate remains intensely local and sellers have retained, or regained, control in some markets, because there are fewer properties to be had and demand is being bolstered by stronger job markets. Even in markets with growing inventories like Chicago, the situation is not uniformly weak in all neighborhoods.

ZipRealty, the discount real estate broker, has found widespread price reductions in the multiple listing services used by all agents to advertise homes. Prices have been trimmed on 35.7 percent of all homes currently listed for sale in the Boston area, for example. The same is true for homes in San Diego, Sacramento, Los Angeles and Miami. And prices have been snipped on a quarter of the homes in Chicago, Washington and Baltimore.

In Silicon Valley, where jobs are coming back after the collapse of the technology bubble, Richard Calhoun, a real estate agent, said that the number of homes sold was now 85 percent of the 25-year average. A year ago, it was 30 percent above that average. In Santa Cruz, inventories have tripled to 124 days, from 42 days.

A result is that the median price of homes in San Mateo County dropped 2.7 percent, to $875,000, in March, from $899,000 a year earlier.

"It's clearly a slowdown," Mr. Calhoun, the Silicon Valley agent, said. "But how can you complain when more than 50 percent of sellers are getting more than their asking price and when you have only two months of inventory when in other places four to six months is considered normal?"

Elsewhere, for the first time in nearly a decade, you can smell the anxiety. The listing agent for a four-bedroom home on Scripps Trail in San Diego informed other agents in the multiple-listing service that a "very, very motivated seller will entertain all reasonable offers" and "will help with closing costs." The house was listed in September at $810,000. After a previous price cut, the seller is now willing to entertain offers as low as $685,000.

The seller bought the house for $730,000 in 2005, according to county property records, for what the listing agent said were investment purposes.

Taking a loss is still rare for sellers, because homes appreciated so much in the 1990's and 2000's. Stephen and Brenda Abelkop bought their four-bedroom house in La Jolla, Calif., for around $850,000 about 15 years ago.

When they put it up for sale right after Thanksgiving, they followed their agent's advice to ask for $2.75 million. "You price it for the market," Mr. Abelkop said.

But they didn't attract much interest. Inventories in the San Diego area have risen 25 percent in the last year, to more than 19,000 unsold homes, a record. So there is a lot more competition, even for a high-end property like the Abelkops' house, which has sweeping views of San Diego Bay. They recently dropped the price to a range of $2.5 million to $2.7 million and said the drop had resulted in more buyer visits.

Some agents say setting price ranges attracts buyers who would otherwise walk away thinking the home was too expensive. Others say it is simply a sign of a wavering owner.

Because sellers are not panicking, it appears unlikely that the real estate market will fall abruptly. "Sellers remain optimistic," said Edward Leamer, an economist at the University of California, Los Angeles.

Mr. Leamer sees some evidence that the bubble is deflating slowly, but says he finds it striking that it has taken so long. For example, sales volume peaked in the San Diego area in the summer of 2003. Only in January did inventories begin to swell, hitting an eight-month supply of homes that month, and sellers began to get nervous enough to bring the prices down.

Inventories have since moved closer to a six-month supply of homes, which balances the volume between buyer and seller.

PMI, a company that tracks risk in the real estate market for mortgage lenders, said the chances were increasing that prices in San Diego would decline in the next two years. The company said the city had a 60 percent chance of a decline, up from 52.8 percent last summer.

Prices in most of California and the Boston-to-New York corridor could also fall, said Mark Milner, the company's chief risk officer. Its statistics, which lag the current market by about two months, show homes continuing to appreciate, but at a slower rate.

After open houses for their four-bedroom, two-story ranch house in Lawrenceville, N.J., brought in no offers, Mary Ellen and Anthony Pierrard are telling potential buyers they are willing to negotiate their $420,000 asking price and are even considering enlisting a real estate agent to help them market their home. That's a far cry from the couple's experience selling two houses on their own in Rockland County, N.Y., a few years ago.

"During the first open house for both, we received a minimum two to three offers," Mrs. Pierrard, a corporate employee relations manager, said. "We sold them on the first day. Now, no one is even making an offer, period."

Robin L. McCarthy, a real estate agent who works in nearby Princeton, N.J., said homes were sitting on the market three to four months, when houses sold in as little as a few days a year ago. Houses that would have been the subject of intense bidding wars now sell for slightly less than asking price.

"Buyers are afraid that real estate prices are going to go down, so they are very careful," Ms. McCarthy said. "They don't want to pay too much."

Thus far, prices have not fallen in any of the 375 largest American cities tracked by the PMI Group. But many are showing a sharp deceleration in price increases, among them Las Vegas, San Diego, Elmira, N.Y., and Lebanon, Pa.

Still, those cities are outnumbered by cities where prices are drastically accelerating — like St. George, Utah; Binghamton, N.Y.; Boise, Idaho; Naples, Fla.; and most cities in Arizona.

"We'd expect a soft landing in prices because, naturally, the economy is strong," Mr. Milner said. Unless a recession hits and people begin to lose jobs, house prices will fall slowly, most economists say.

In the new home business, large builders like Toll Brothers and Hovnanian Enterprises report that orders have fallen 4 percent to 29 percent but that average selling prices are still rising, albeit more slowly than six months ago. Nationally, however, the Commerce Department reported that median new-home prices — half the homes sold for more, half for less — fell 2.2 percent, to $224,200, in March from a year ago. It was the first year-over-year price decline since February 2003.

Inventories are not high in every city. For a variety of reasons, mostly stronger job markets, sales and prices are picking up in markets like Houston, Boise and Dallas, which did not see a boom in recent years, experts say.

In Seattle, for instance, some buyers are enmeshed in bidding wars that push prices far beyond the asking price — a phenomenon that was common in San Diego, Las Vegas and Washington only a year ago. Glenn Kelman, chief executive of Redfin, a new online real estate service based in Seattle, has hired a champion video gamer, with great thumb-twitching skill, to speed data entry during the multioffer auctions. "Polite, soggy Seattleites have become blood-thirsty cannibals," he said.

Houston appears to be benefiting from strength in the energy industry, robust hiring and transplants from Louisiana. More than 100,000 hurricane evacuees are living in the city and its suburbs. Clint Simpson of Greenwood King Properties said that in the last month he had represented four home buyers who were relocating to Houston because their companies were scaling back operations in New Orleans.

"Houses are getting multiple offers the first week on the market and many of them are going over list," he said.

In March, sales of existing homes were up 22 percent from a year earlier and median prices rose 5.4 percent, to $143,310, according to the Houston Association of Realtors. Inventories fell by nearly 3 percent in the month.

Formerly hot coastal markets and previously flat markets in the middle of the country have reversed their roles, said Mr. Lereah, from the Realtors association.

In Chicago, real estate agents say each neighborhood is different. A high-rise building boom has created a glut of condos downtown and buyers can often negotiate free parking spaces, which previously would have cost $35,000. But the pickings are so slim in the popular Lakeview area north of the central business district that an agent, Brad Lipitz, recently found only three listings there. "Chicago is comprised of many markets," he noted.

In Southern Florida, agents and sellers say sales have slackened as inventories have ballooned, but they note that prices are not falling.

Donna L. Lanzon sold her late mother's two-bedroom condo in Deerfield Beach in Broward County in March. The condo was initially priced at $250,000, but Ms. Lanzon reduced the asking price to $235,000 and sold the 1,260-square-foot, two-bedroom unit for $225,000 after three months on the market.

Her agent, Cathleen Flanagan, who works for ZipRealty, said the growing inventory — the Fort Lauderdale area had more than 20,000 homes for sale at the end of April, more than four times the level a year ago — had forced sellers to rethink their asking prices and offer incentives, like increasing the commission of the buyer's agent to 4 percent, instead of following the usual practice of splitting a 6 percent commission between buyer's and seller's agents. One seller recently offered a free five-night Caribbean cruise for two.

Do the tactics work? "Absolutely; it makes sense," Ms. Flanagan said. "A lot of buyers' agents will go out there to see the home."

The NYT asks if the Federal Reserve stops raising interest rates later this year, will the rest of the world go along?

When Fed policy makers meet on Wednesday to set overnight interest rates, they will almost certainly increase them by another quarter-point, to 5 percent. And investors will search for any clues about a pause in further rate increases.

But a growing number of economists are looking at a different possibility: that changes in the global economy could keep pushing up long-term interest rates long after the Fed stops raising its benchmark rate.

The result would be a mirror image of the "conundrum" that perplexed Alan Greenspan, the former Fed chairman, all last year. The conundrum was that long-term interest rates remained low and overall credit conditions relatively easy even as the Fed raised short-term rates.

Now, even as Fed bankers indicate that they may be near the end of their increases, the long-term interest rates that determine home mortgage rates and companies' borrowing costs have crept higher.

Increased anxiety about future inflation has been partly to blame, analysts say. But long-term rates have edged up around the world, suggesting that global forces are at work.

Japan, the world's second-largest economy after the United States, is growing faster than it has in more than a decade, and the nation's central bank, which has kept interest rates negligible, is expected to start raising them again. European growth, though rising more slowly than in the United States, is accelerating, and the European Central Bank, after pausing in April, is expected by many to resume increases. Its benchmark short-term rate, at 2.5 percent, has been raised twice since December.

Meantime, China's economy surged by nearly 10 percent last year, and Chinese leaders promise to spur the kind of domestic demand that would keep more money at home.

Higher growth leads to more competition for investment capital, which tends to drive up interest rates. And as rates rise in foreign countries, there is less incentive to seek higher returns in the United States.

That could pose a challenge for Ben S. Bernanke, who took over as Fed chairman in February. Mr. Bernanke has argued that the combination of low interest rates and the United States' expanding trade deficit stemmed in part from a "global savings glut" — a vast pool of idle money in Asia and other parts of the world that found its way back into the United States.

As Robert J. Barbera, chief economist at ITG/Hoenig, sees matters: "It looks increasingly obvious that there is a boom on the globe today; it's just not happening here. That in turn would suggest that the moderating activity here in the United States may not elicit lower interest rates. What was a conundrum for Greenspan then becomes a problem for Bernanke."

Robert V. DiClemente, chief United States economist at Citigroup, said that speculation about the changing global demand for money had helped feed a run-up in long-term rates.

"I think people are speculating about this, speculating that growth rates may converge, that savings will come more into balance and that there is going to be a draw on capital that's going to suck money out of the United States," Mr. DiClemente said.

To be sure, part of the recent rise in long-term interest rates reflects worries about inflation.

One proxy for inflation worries is the gap between yields on conventional Treasury debt and the yields on inflation-adjusted Treasury securities, or TIPS.

That gap widened last month to 2.8 percentage points, from 2.7 points, and much of the widening occurred after Mr. Bernanke told lawmakers that the Fed might temporarily stop its rate increases.

Recent economic data about inflation has been mixed. Overall consumer prices have climbed markedly, largely because of oil prices; the Fed's preferred gauge of core inflation, which excludes food and energy costs, is up about 2 percent over the last 12 months.

That is about the upper limit of what Mr. Bernanke has described as his comfort zone for inflation. Meanwhile, growth in the United States was much faster in the first quarter than most economists had expected. And while job creation slowed to 138,000 in April, unemployment was only 4.7 percent and hourly wages climbed 3.8 percent over the last year — the biggest jump in five years.

But many analysts say the inflation outlook remains fairly tame. Nonfarm productivity, the amount of output for each hour of work, rose at an annual pace of 3.2 percent in the first three months of 2006.

Higher energy prices seem to have had little impact on other consumer prices, and corporate profits are so high that many companies can absorb higher wages without raising prices.

The view of Fed officials that they are near the end of their rate-raising efforts is predicated on the expectation that the nation's growth will slow from an annual pace of 4.8 percent in the first quarter to about 3 percent in the second half of 2006. But even if the Fed is sanguine about inflation, global forces could push up borrowing costs.

An increase in global interest rates would not necessarily be bad news for Mr. Bernanke. Higher long-term rates would help cool down American economic growth, and the housing market in particular, without requiring the Fed to take more action on its own.

But higher global rates could also slow the United States economy enough to increase unemployment.

Either way, analysts said, the economy is more dependent on global forces than was true a decade ago.

"It is more exposed because of the fact that it needs massive amounts of cash from the rest of the world," said Nigel Gault, senior economist at Global Insight, a forecasting firm in Lexington, Mass. "In a strange way, the world is riskier for the United States if everyone else is doing better."