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With mortgage rates trending downward, inventory growing and affordability improving, this year could offer new opportunities for buyers and sellers in North Dakota, Minnesota and beyond.
As 2026 begins, many would-be homeowners wonder whether this year will be a buyers’ or sellers’ market. The answer: both. Many economists and housing experts expect the market to stabilize this year, with some going as far as saying this could be the most balanced it’s been in nearly a decade.
This means if you’re thinking of buying or selling, 2026 could be a good year to make your move.
There are three main considerations factored into housing market predictions: mortgage rates, housing inventory and housing affordability.
2026 mortgage rates predicted to decline
After starting 2025 at close to 7%, the average 30-year fixed-rate mortgage ended the year at 6.15%, according to the Federal Home Loan Mortgage Corporation, known as Freddie Mac. This was the lowest level for 2025, Freddie Mac’s Primary Mortgage Market Survey shows, and rates are predicted to continue a slow decline.
In its December 2025 housing forecast, the Federal National Mortgage Association, known as Fannie Mae, predicted the 30-year fixed rate mortgage would drop to 5.9% by the last quarter of this year and stay there through 2027.
Locally, dropping rates are already making a difference.
“With the mortgage rates falling below 6%, the purchase and refinance markets have experienced notable growth over the past several months,” said Todd Nankivel, a Gate City Bank Senior Mortgage Loan Officer in West Fargo, ND. “As rates continue to decline, increased housing inventory has entered the market.”
The change in rates means buyers are starting to feel hopeful, added Tammy Skogen, a Gate City Bank Senior Mortgage Loan Officer in Bismarck, ND.
“A lot of buyers were essentially priced out of the market in 2023 and 2024 due to rising interest rates and housing prices – and many had come to accept the new normal of higher rates and costs,” she said. “Each time rates dropped below 6%, it brought a surge of buyers and a smattering of refinance applications. Even though rates didn’t drop as low as many hoped, people found comfort in having some relief from higher rates.”
2026 housing inventory expected to grow
With 20% more homes on the market than this time last year, buyers should have more choices when looking for a home, said Lawrence Yun, National Association of Realtors Chief Economist. That’s because life-changing events are starting to override the lock-in effect, where homeowners with significantly lower mortgage rates are less likely to sell, putting more pressure on an already limited supply and driving up home prices.
In addition, if you’re thinking of building, a recent National Association of Home Builders survey showed 67% of builders used sales incentives in December and 40% dropped prices to entice buyers.
Plus, Robert Dietz, National Association of Home Builders chief economist told REALTOR® Magazine the median price of a newly built home is less expensive than the median resale home price – something he said has only happened a few times over the last few decades.
Looking to build? Learn about Gate City Bank’s extended interest rate locks, lot loans and more.
Explore construction options2026 housing affordability projected to improve
The last few years have been among the toughest housing affordability environments in modern history, said Nadia Evangelou, a senior economist with the National Association of Realtors.
“Mortgage rates jumped from 3% in 2021 to above 7% in 2023, and that pushed the typical payment up by more than $1,000 a month compared to pre-pandemic levels,” she told REALTOR® Magazine, adding that if rates drop to 6%, the buyer pool is expected to increase significantly.
Economists say that between lower mortgage rates and incomes expected to grow at higher rates than home prices, monthly payments should decline for the first time since 2020.
“Home price growth will be minimal – roughly 2% to 3% – about the same as overall consumer price inflation,” Yun said. “Generally, wage growth will be above that.”
When this happens, buyers have more purchasing power.
Calculate your purchasing power. The first step toward moving into a new home is learning what you can afford.
Start with our mortgage calculatorIn North Dakota, Skogen said the Primary Residence Credit, which helps qualifying homeowners save up to $1,600 on property taxes, is also influencing buyers.
Yahoo! Finance is reporting that homes are spending more time on the market and in locations with more homes for sale, buyers have a bit more room to negotiate on repairs, closing costs and financing terms. At the same time, the financial news platform also reports there are still more buyers than homes for sale – especially in the first-time homebuyer range – and “move-in-ready, well-priced homes still attract eager buyers.”
Because the housing market isn’t leaning clearly toward buyers or sellers, Yahoo! Finance says it’ll be more important than ever to work with real estate and lending professionals who know your local market.
In addition to an increase in mortgage applications, mortgage lenders also expect an increase in homeowners looking to refinance their mortgages.
“With rates trending downward the last half of 2025, we have started to see refinances again,” said Emily Hills Boyle, a Gate City Bank Senior Mortgage Lender in Grand Forks, ND. “For homeowners with higher rates, refinancing your mortgage can help lower your monthly payment – even if you’ve just closed within the last couple of years.”
“While I saw an uptick in refinance applications at the end of 2025, I think some are still holding off, hoping they’ll drop further,” Skogen noted. “Even if rates remain constant, I think those who opted to wait will likely jump in to start saving.”
A Note of Caution
Factors that could negatively impact potential homeowners are rising property taxes and insurance costs. As these costs push escrow payments higher, more homeowners are falling behind on their mortgage payments, according to Cotality, a data analysis company.
Make sure you have the right coverage for what you need.
Request a free quote from local insurance advisors, such as Gate City Insurance Agency, to compare affordable coverage options.
Bottom line: With rates dropping and inventory growing, partnering with knowledgeable local experts will help you navigate this year’s unique market conditions. Contact us when you’re ready to get started.
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