Missing middle multifamily starts backslide amid zoning headwinds

Construction of small multifamily buildings — a key component of the “missing middle” housing stock — fell again in the second quarter of 2026 and remains far below its historical share of apartment development, according to new analysis from the National Association of Home Builders (NAHB). NAHB Chief Economist Robert Dietz reported that just 3,000 housing units in 2- to 4-unit properties were started in the second quarter, based on NAHB’s read of Census data. That was down sharply from the same period in 2025, when 2- to 4-unit starts totaled 4,000 units, and continues a post-Great Recession slide in small-scale multifamily construction. Over the last four quarters, builders started 16,000 units in 2- to 4-unit buildings, Dietz said, down from 21,000 in the prior four-quarter period — a roughly 24% drop. These projects represent the multifamily portion of the “missing middle,” a category that also includes townhomes, duplexes and other medium-density formats between detached single-family homes and mid- or high-rise apartments. As a share of total multifamily production, small apartment buildings are now a niche segment. Two- to four-unit projects accounted for just 3% of all mul...