Newport makes pricey list on 30-year, fixed-rate mortgage.

Newport Beach is not the most expensive place to buy a home in the country, but it's pretty close.

Newport Beach took sixth place in Coldwell Banker's Home Price Comparison Index with an average 2005 home value of $1,499,000. All but one of the 10 most expensive markets in the United States, Canada and Puerto Rico were California cities.

The report only surveyed prices of four-bedroom homes with about 2,200 square feet of space, 2½ bathrooms, a family room and two-car garage.

Those requirements affected which cities wound up in the top 10 most expensive markets, said Steve High, an executive vice president for Coldwell Banker Previews International. For example, nearby Laguna Beach has plenty of high-priced real estate, but its streets are not laid out like a typical suburb.

To the south, La Jolla was ranked as the most expensive city in the survey. The coastal city was followed in the top 10 by Santa Monica, Beverly Hills, Santa Barbara, Palo Alto, Newport Beach, San Mateo, San Francisco, San Jose and Greenwich, Conn.

High was not surprised to see California cities dominate the price rankings.

"Almost everything that we see pricing-wise, California tends to be the leader," he said. "If you look at technology and jobs and where people are making money, it tends to be on the West Coast."

Coldwell Banker's report stated a diminished supply of homes -- 40% fewer than in 2004 -- has caused local home prices to stay high. Peter Hernandez, president of Coldwell Banker Orange County, said he thinks low supply and comparatively low mortgage rates will sustain the residential market.

"Inventory is extremely low. Everyone's nervous because interest rates are climbing toward 6%, and we have to laugh because that is so low," he said.

As of Thursday, the average rate for a 30-year, fixed-rate mortgage in the western United States was 5.9% plus 0.7 of a point, according to mortgage investors Freddie Mac.

The most affordable city listed in the survey was Killeen, Texas. The average home price in the city near Fort Hood was $131,328.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.