While rents have been declining modestly nationwide, some major housing markets are bucking the trend.

Eighteen of the 50 largest metropolitan areas recorded year-over-year rent increases in March, according to the latest Realtor.com® rent report. This was for studios and one-bedroom and two-bedroom units.

The five cities with the largest annual rent hikes were all in the Northeast and Midwest last month, underscoring how regional supply and demand can drive the biggest bumps.

Chicago led the pack in March with a rent hike of 4.3% from a year ago. The median monthly rent was $1,846 last month, up $76 from the same time last year.

Landlords also raised rents in New York City, where they jumped 3.8% year over year to $2,876. Boston, which ranked No. 4, saw a 3.3% annual rent increase, taking asking rents to $3,023.

The Northeastern region in particular has suffered from a lack of available land for new multifamily construction, says Realtor.com economist Jiayi Xu. The resulting shortage of available units has driven the region’s steep rents even higher.

In addition to supply constraints, says Xu, “the high housing prices in these expensive markets, plus elevated mortgage rates, may force people to stay in rental markets longer” as they delay plans to buy a home.

The longer tenants wait to buy homes, the more demand builds for rentals, she notes.

Two other Midwestern cities also made the top five for rent hikes in March: Kansas City, MO, No. 3, and Indianapolis, No. 5. In Kansas City, rents rose 3.4% to $1,340. In Indianapolis, they increased 3.3% to $1,297.

Xu notes that both Midwestern markets remain relatively affordable compared with Chicago. Rents rose $44 in Kansas City and $41 in Indianapolis in March from one year earlier.

Lower unemployment rates in a city can fuel demand for apartments, causing prices to rise, adds Xu.

“For Kansas City and Indianapolis, in addition to affordability, both of them have strong labor markets, with unemployment rates of 3.6% and 3.7% [respectively] in February,” says Xu.

Below are the metros where rents are rising the most.

1. Chicago, IL

Median rent in March: $1,846 
Increase in median rent from a year ago: 4.3%

2. New York City, NY

Median rent in March: $2,876
Increase in median rent from a year ago: 3.8%

3. Kansas City, MO

Median rent in March: $1,340
Increase in median rent from a year ago: 3.4%

4. Boston, MA

Median rent in March: $3,023
Increase in median rent from a year ago: 3.3%

5. Indianapolis, IN

Median rent in March: $1,297
Increase in median rent from a year ago: 3.3%

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