The U.S. housing market witnessed the highest level of “missing middle” housing construction over the past year since the period before the Great Recession, according to the National Association of Home Builders (NAHB).
A total of approximately 19,000 residential units were built in projects consisting of two to four units, equivalent to around 5,000 projects per quarter, with the exception of the third quarter, which recorded a slight slowdown.
These medium-density housing types—such as townhouses, duplexes, and other small multi-family developments—are referred to as the “missing middle” because they typically represent the first and most affordable housing option for young buyers entering the market.
Although the figure remained stable compared to the fourth quarter of 2024, it is still considered the highest level since 2007. For instance, 2024 saw a slight decline, with around 18,000 units initiated in this segment.
At the same time, Joel Berner, chief economist at Realtor.com, explained that this type of housing is gaining increasing attention, particularly in urban areas where older single-family homes are being replaced by smaller-scale developments.
He also noted that some suburban developments now include a mix of townhouses and single-family homes, which helps improve housing affordability in areas that are traditionally difficult for younger buyers to access through conventional means.
The National Association of Home Builders attributes this slowdown in growth to zoning restrictions, emphasizing that the solution lies in comprehensive government reforms to these regulations. However, the housing market as a whole continues to face significant challenges.
A 2026 housing supply gap report by Realtor.com indicated a shortage of approximately 4.03 million housing units, largely due to reduced construction activity over the past year.
Meanwhile, Ed Brady, chairman of the Home Builders Institute, stated that one of the sector’s biggest challenges is the burden of regulatory constraints. He stressed that lower housing prices are closely tied to expanding the availability of affordable housing options.
He added that meeting the needs of this underserved segment would benefit the entire system, as the inability of individuals to transition into homeownership increases pressure on the rental market and drives up costs unnecessarily.
