The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.

The multifamily segment of the missing middle (apartments in 2- to 4-unit properties) has generally disappointed since the Great Recession. For the third quarter of 2025, there were 4,000 2- to 4-unit housing unit construction starts. This represents a small decrease relative to the third quarter of 2024.

Over the last four quarters this type of construction totaled 19,000 units, up 12% over the four quarters prior to that period (17,000). Nonetheless, this subsector of residential construction continues to underperform relative to its potential, due in part to zoning restrictions.

As a share of all multifamily production, 2- to 4-unit development was just 3% of total multifamily development for the third quarter. This remains lower than recent historic trends. From 2000 to 2010, such home construction made up a little less than 11% of total multifamily construction.

Construction of the missing middle has clearly lagged during the post-Great Recession period and will continue to do so without zoning reform focused on light-touch density. Despite some acceleration in late 2024 and early 2025, the sector continues to lag.