The average price of a rental apartment in Manhattan surged above $5,000 in June for the first time, hitting $5,058, according to a report from brokerage firm Douglas Elliman out Thursday.

Why it matters: Manhattan is ultra-expensive — typically an outlier — but in this case it's on-trend. Rents are up across the country, as soaring mortgage rates keep potential homebuyers stuck in the rental market.

• "You have a whole cohort being steered into rentals," says Jonathan Miller, the CEO of appraisal firm Miller Samuel who authored the Elliman report.
• New Yorkers may still be avoiding the office, but they want to live in the city, he said. Demand is surging, and is expected to intensify this summer, he said.

The big picture: This points to a conundrum. The Fed is raising rates to cool inflation. But rate hikes are driving higher rents, which are fueling inflation.

Zoom out: Across the country, rents were up .8% in June from the prior month — the largest monthly jump since 1986, according to yesterday's blazing hot CPI report. They've increased 5.6% since last year.

• If those numbers seem low — after all there are headlines about 40% rent increases — it's because the CPI measure includes renewal rents, the price you pay when you renew your lease. Many popular rent measures only look at asking rents for new renters (more here).