Multifamily missing middle construction declined at the start of 2026.

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 first quarter of 2026, there were 4,000 2- to 4-unit housing unit construction starts. This was down significantly compared to the first quarter of 2025.

Over the last four quarters, there were 23,000 such starts, down slightly from the prior four quarter period (24,000). Despite some gains in 2025, 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 4% of total multifamily development for the fourth quarter. This remains lower than recent historical 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.