Rents are rising in the Cincinnati metro area at the fastest pace of any major metro in the Midwest, a new report shows.

Why? High demand — and a flood of new upscale apartments with luxury amenities and opulent prices.

Rents paid for new resident leases climbed 5.4 percent during the 12 months ending in July, outpacing increases of 5 percent in the Minneapolis–Saint Paul metro area, and 4.7 percent in the Detroit metro, according to a recent report from RealPage Inc., a real estate analytics firm.

The findings came as a surprise to RealPage Chief Economist Greg Willett who has been studying apartment trends for years.

"Off the top of my head, if you quizzed me, I wouldn't pick Cincinnati as one of the top rental markets in the country,'' Willett said. "But Cincinnati has moved ahead of the pack at least compared to everyone else in the Midwest.''

By contrast, rents are coming down in some of the country's biggest rental markets, including New York City, where former mayoral candidate Jimmy McMillian famously lamented "The Rent is Too Damn High'' as part of his campaign platform.

The record pace of construction in some major markets has created a glut of apartments, forcing landlords to lower rents or offer move-in incentives to compete for tenants.

No such luck for renters in the Cincinnati area, where the apartment supply has yet to reach saturation levels, according to Willett.

"While there is some meaningful building going on, (apartment) inventory is only expected to grow by about 2 percent next year,'' he said. "The robust rent growth in Cincinnati reflects the area’s limited product availability.''

Despite the upward trend, Cincinnati is still considered one of the more affordable rental markets in the country, with monthly rents averaging $935 in August - about 30 percent below the national average, according to the latest figures from Rent Cafe, a nationwide apartment search website.

But rising mortgage rates, a dearth of homes for sale and demographic shifts that find more and more people choosing to rent promise to stoke the red-hot demand for apartments in Cincinnati and keep rents rising at a steady pace.

At the recently opened Baldwin apartments, just north of downtown on Eden Park Drive in Walnut Hills, units are being rented almost as fast as they are being built, according to Amanda Kladakis, marketing manager for Neyer Properties, which helped redevelop the former Baldwin piano factory.

The eight-story, 188-unit apartment complex – where rents range from $1,300 for a one-bedroom apartment to $3,800 for a two-bedroom unit – is about 80 percent full.

But occupancy would likely be even higher if the building had been finished before leasing began, according to Kaldakis, who noted the eighth-floor was opened to renters just last week.

"We've definitely exceeded our expectations,'' she said. "We're way ahead of what we targeted just a month after opening.''

The Baldwin is just one of a slew of new apartment developments coming online in the Cincinnati metro area in recent years.

A total of 3,296 units were finished in the 12 months ending in June 2017, and projects currently under construction will add another 3,162 units to the Cincinnati-area stock, according to RealPage.

As in most cities, apartment development in Cincinnati has been concentrated in the urban core, especially downtown, where most new multifamily developments fit the luxury niche.

For example, the 133-unit Encore Urban Living complex at 716 Sycamore St., will offer residents six different designer finish packages with gourmet kitchens and manicured outdoor living spaces.

The $52 million, 17-story apartment tower, formerly known as Eighth and Sycamore, will host an open house next week to showcase its extensive list of high-end amenities.

Potential renters aren't likely to find many budget-friendly bargains, although developer North American Properties said pricing for the units won't be released until next week.

Rents in such luxury apartment communities, identified as Class A properties, are growing at an even faster rate than the overall rental market, according to RealPage, which showed Class A rents in the Cincinnati area grew at an annual rate of more than 7 percent in the second quarter of 2017.

Still, there may be one silver lining: While Cincinnatians are spending more and more of their income on rent, at least apartment rental approval rates are up.

With an 87.6 percent approval rate, Cincinnati has the 13th highest rental application acceptance rate in the country, according to a recent analysis of resident screening data by Rent Cafe's Nadia Balint.

Rental Application Approvals Are Up - Active Millennial Hubs Seattle, Portland Have the Highest Approval Rates - RENTCafe rental blog

"With the completion of large numbers of new apartments, landlords are more motivated to fill them up,'' said Balint, a real estate writer and content developer.