Ask A Researcher

February 2023

Housing Market Conditions and Declining Homeownership Rates

Dr. Nancy Hodur is the director of the Center for Social Research at North Dakota State University and has over 25 years of professional experience in applied research, public policy, and outreach education. Nancy's primary research areas include socio-economic impact assessment, community and economic development, and natural resource management. Nancy's efforts have focused on issues related to the rapid expansion of North Dakota's oil and gas industry including population and school enrollment projections, and the assessment of the characteristics, perceptions and intentions of the oil and gas industry workforce.


Housing plays a key role in quality of life for residents in North Dakota communities. Housing is more than just shelter. A home is where families raise their children, older adults age in-place, and ill or disabled people may feel most comfortable. Affordable housing is important to community vitality and the lack of affordable, quality housing can intensify social concerns such as poor educational attainment, mental and physical health, and general household stability. In addition, affordable housing is critical for economic considerations, such as building wealth and attracting workers to address the state’s workforce issues.

Data show that homeownership rates in North Dakota have dropped across all income categories since 2010. The largest drop in the homeownership rate was among low-income households earning $50,000 to $74,999 and lower-moderate income households earning $75,000 to $99,999. The low-income homeownership rate declined by 18 percentage points, declining from 78% in 2010 to 60% in 2020. The lower-moderate income homeownership rate declined 14 percentage points from 87% in 2010 to 73% in 2020. The decline in homeownership rates may indicate changing market conditions, changes in consumer preferences, or both. As part of the 2022 North Dakota Statewide Housing Needs Assessment, current housing market conditions were examined using data on housing sales listed in the state’s seven multiple listing services and data from the annual Sales Ratio Study conducted by the North Dakota Office of State Tax Commissioner. Data were aggregated for the state’s 12 largest cities (Bismarck, Devils Lake, Dickinson, Fargo, Grand Forks, Jamestown, Mandan, Minot, Valley City, Wahpeton, West Fargo, and Williston) and are representative of the state’s urban communities. All other data were aggregated and represent rural North Dakota.

Current market conditions may provide insight into why homeownership rates have declined in the past 10 years.

Rising Home Prices

Housing sale prices have increased in all 12 of the state’s largest cities by at least 47% from 2010 to 2020. Sale prices for housing in rural areas also increased since 2010 and at rates that were greater than observed in the state’s 12 largest cities. In rural areas, price increases ranged from 88% in Region III (Devils Lake region) to 372% in Region I (Williston region).

Average housing prices in 2020 for the 12 largest cities ranged from a low of $158,089 in Valley City to $307,785 in West Fargo. Prices in rural areas of the state ranged from $109,357 in Region III to $252,407 in Region I. In rural areas of the state, while housing prices have risen dramatically, prices are still low relative to the state’s 12 largest cities. Given the substantial regional variability in average sale prices, it is difficult to generalize change in prices statewide, other than to say prices have increased substantially since 2010.

Rising home prices are further illustrated by the increase in the price per square foot of both new construction and existing home sales. The average price per square foot in the state’s 12 largest cities increased by $56 for existing homes and $45 for new construction since 2012, averaging $161 and $207, respectively in 2021. Average price per square foot also increased in rural North Dakota for both existing home and new construction sales since 2012. Price per square foot for existing home sales in rural North Dakota grew steadily and moderately, increasing by $37 since 2012 from $76 per square foot to $113 per square foot in 2021. The increase was more dramatic for new construction sales in rural areas, increasing by $90 since 2012 from $140 per square foot to $230 per square foot in 2021.

The price per square foot for existing home sales has been consistently lower in rural areas of the state than urban communities. However, price per square foot for new construction sales in rural North Dakota is generally higher than in the state’s 12 largest cities. From 2017 to 2019 the price per square foot for new construction was similar in both rural and urban North Dakota, ranging from $181 to $188 per square foot. However, the price per square foot for new construction in rural North Dakota increased considerably in 2020 and 2021. In 2020 and 2021, the price for new construction in rural North Dakota was $203 and $230, respectively, compared to $194 and $207 per square foot, respectively, in the 12 largest cities.

Fewer Affordable Houses for Sale

There are fewer affordable priced homes on the market in North Dakota. Since 2012, the percentage of higher priced home sales as a share of total sales in North Dakota has increased while the percentage of lower priced home sales as a share of total sales has decreased. In the state’s 12 largest cities, housing priced at $250,000 or less accounted for more than three-forths of total sales in 2012 (77%) as compared to less than half in 2021 (48%). The percentage of housing priced at $350,000 or more increased from 6% of sales in 2012 to 23% in 2021. In rural North Dakota the percentage of sales at higher prices increased as well. In 2012, 91% of houses were sold for $250,000 or less. By 2021, this percentage decreased to 69%. The increase in the percentage of higher-priced housing sold and the decrease in lower-priced housing sold further supports recent trends of increased housing prices.

Limited Opportunities

Strong market conditions have limited homeownership opportunities in North Dakota. In both the state’s 12 largest cities and in rural areas, the average number of days on market has declined since 2017. In the state’s largest cities, homes are selling faster in all home price categories, except homes that sold for $150,000 or less. This may suggest that lower priced housing in the state does not meet consumer preferences.

The average number of days on market was considerably longer across all price ranges in rural North Dakota when compared with urban areas. While the average days on market was longer in rural areas than in the 12 largest cities, the average number of days on market in rural areas sharply declined for all sales price ranges from 2020 to 2021 except for higher priced housing ($350,000 or more). While there is considerable variability in the number of days on market between rural and urban communities, the decline in the average days on market illustrates strong market conditions throughout the state.

Aging Inventory

Regardless of location, lower priced houses, those priced at $250,000 or less are substantially older than higher priced houses in North Dakota. Houses priced at more than $350,000 were on average 16 years old. Conversely, houses that sold for $150,001 to $250,000 were on average 49 years old. Houses priced at $150,000 or less were on average 66 years old. Further, houses priced at $150,000 or less were on average 10 years older in rural North Dakota than in the 12 largest cities (houses were 72 years old on average in rural North Dakota compared to 61 years old on average in the 12 largest cities).

Fewer Affordable Options

The decline in homeownership rates has been greatest for low- ($43,521 to $69,520) and lower-moderate income ($69,521 to $99,935) households. In 2020, there were approximately 72,818 low-income households in North Dakota and 45,518 lower-moderate income households, of which 39% of low-income households were renters and 27% of lower-moderate income households were renters. The market data suggest that there are few houses on the market that would be affordable to low- and lower-moderate income households. While not all renters may want to be homeowners, if 10% or 7,281 low-income households desired to purchase a home, there were only 5,835 sold through the state’s multiple listing services that would be considered affordable for a low-income household. For lower-moderate income households, if 20% or roughly 9,100 lower-moderate income households wanted to purchase a home, only 8,325 homes sold through the state’s multiple listing services would be considered affordable. An affordable purchase price based on standard industry assumptions and a 30-year fixed rate mortgage at 5% would suggest an affordable purchase price of $210,000 for low-income households and $302,000 for lower-moderate income households.

Rising Interest Rates

In 2020, the 30-year fixed mortgage rate was 3.1%, but by mid-year 2022 mortgage rates had increased to 6%. Mortgage interest rates have substantial impacts on what would be considered affordable housing. For example, for lower-moderate income households (households earning $75,000 to $99,999) the maximum affordable purchase price with a 3.1% interest rate would be $354,000. However, with a 6% interest rate, the maximum affordable purchase price would be $279,000. For low-income households (households earning $50,000 to $74,999) the maximum affordable purchase price with a 3.1% interest rate would be $246,000. However, with a 6% interest rate the maximum affordable price would be $194,000. Rising interest rates undoubtedly impact affordability and potential homebuyers’ purchasing power. However, the effects of recent increases in mortgage rates on the decline in homeownership is not captured in this analysis. This market assessment examined transactions from 2011 to 2021, before mortgage interest rates increased dramatically. The trend of declining homeownership was well pronounced before the dramatic increase in mortgage interest rates. To what degree the increase in interest rates affects this trend remains to be seen.

Conclusions and Implications

The examination of market conditions using data from multiple listing services confirms what those familiar with real estate markets intuitively knew. Housing prices are increasing statewide. The percentage of homes sold at a higher price is increasing while the percentage of lower priced houses as a percentage of total sales is decreasing. The declining number of days on market suggests strong market conditions across the state. Lower priced houses spent the most days on market and were also on average the oldest properties, which suggests lower priced houses may need repairs, updates, or do not meet customer preferences. Further, the multiple listing service data suggest there may be an insufficient number of homes on the market that would be affordable for low- and lower-moderate income households.

This assessment of market conditions provides some insight into what may be driving the decline in homeownership rates. Price increases and a lack of affordable houses on the market are likely contributors. However, this examination suggests that the decline in homeownership may also be a function of characteristics of homes on the market. Affordable housing that goes on the market sells quickly except for the oldest and lowest priced homes. It is possible that declining homeownership rates are not only a function of the rising price of housing, but a mismatch between current inventory and consumer preferences. Further research is needed to better understand what is driving the decline of homeownership rates in North Dakota.

For more information

The 2022 North Dakota Statewide Housing Needs Assessment is available online at In addition to housing market analysis, the assessment includes statewide population and housing forecasts, regional profiles, and detailed tables broken down by various levels of geography including the state as a whole, the eight planning regions, 53 counties, 12 major cities, and four American Indian Reservations.

The study authors and the North Dakota Housing Finance Agency hope the information generated by the study will help community leaders, non-profits, and state and local government assess recent trends, current conditions, projections and other key considerations in order to develop programs and policy ensuring safe, adequate, and affordable housing in North Dakota.

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