A novel geothermal heat pump (GHP) system with an integrated low- to moderate-temperature salt hydrate phase change material (PCM) storage tank for buildings in cold climates is proposed in this study. The purpose of the PCM storage tank is to dampen peak heating loads and to remove annual ground thermal load imbalances on the ground heat exchanger (GHX) to assist in achieving an optimally-sized GHX. As heat is extracted from the closed-loop system by heat pumps in heating mode, a significant portion of this heat is used to solidify a salt hydrate PCM. This heat of fusion is later released back into the heat transfer fluid, storing it in the PCM tank and GHX for later diurnal and seasonal use. To examine the merits of the proposed concept, electric utility meter data on 15-minute time intervals were mined from an actual apartment building and used to estimate space heating, cooling, and hot water heating loads. Those data were used in an hourly, dynamic 20-year life-cycle simulation model in TRNSYS to design an optimum combination of GHX and PCM storage, where each component was sized to balance the annual ground thermal loads. The system simulation results show significant potential for GHX size reduction with a PCM storage tank, but the system is quite sensitive to the PCM melt temperature due to significant hysteretic nature of the salt hydrate PCM heating and cooling curves. We also find that there is no unique optimum unless other factors are considered such as installation cost and physical constraints; many combinations of GHX size and PCM mass are capable of achieving the design goal with similar annual electric energy consumption. For the cases examined here, a PCM melt temperature of 27 °C yields the most favorable economic results, and a preliminary economic analysis suggests that with typical drilling cost and PCM tank cost values, the GHX size can be reduced by over 50 %.