Missing Middle Weakness in Home Building

By: Robert Dietz in NAHB Missing Middle Weakness, January 19, 2026

(January 20, 2026) — NAHB says the “missing middle” includes medium-density housing such as townhomes, duplexes, and other small multifamily properties.

But the multifamily slice of that category—apartments in two- to four-unit buildings—has underperformed since the Great Recession. In the third quarter of 2025, there were about 4,000 starts in two- to four-unit properties, a slight decline from the third quarter of 2024.

Over the past four quarters, starts totaled roughly 19,000 units, up 12% from the prior four quarters (17,000). Even with that gain, output remains well below what the market could support, with zoning constraints cited as a key barrier.

Two- to four-unit buildings accounted for just 3% of all multifamily construction in the third quarter—still below historical norms. From 2000 to 2010, this housing type represented just under 11% of total multifamily development.

Overall, missing-middle construction continues to lag in the post-recession era and is unlikely to close the gap without zoning reform that allows “light-touch” density. Even after a modest pickup in late 2024 and early 2025, the sector remains behind.