Construction of 2- to 4-unit multifamily buildings, known as the "missing middle," fell in Q2 2026 to 3,000 units, according to NAHB Chief Economist Robert Dietz. These starts now represent 3% of total multifamily production, down from nearly 11% between 2000-2010, with zoning restrictions cited as a primary constraint.
16,000 unitsmissing middle multifamily starts over past year
21,000 unitsmissing middle multifamily starts in prior four-quarter period
3%share of total multifamily production for small buildings
11%share of total multifamily production for small buildings (2000-2010)
Who's Involved
Robert Dietz
NAHB Chief Economist
National Association of Home Builders (NAHB)
organization analyzing housing data
↳ Why This Matters
The decline in "missing middle" housing construction, driven by zoning restrictions, exacerbates housing affordability issues by reducing the supply of medium-density, relatively attainable units in established neighborhoods.
Key facts
Construction of 2- to 4-unit multifamily buildings declined in Q2 2026.
Starts for these smaller multifamily projects fell to 3,000 units in the quarter.
Over the past year, 16,000 units were started, down from 21,000 in the prior four-quarter period.
These buildings now account for only 3% of total multifamily production, compared to nearly 11% from 2000-2010.
NAHB Chief Economist Robert Dietz cited zoning and land-use restrictions as key factors.
Construction of "missing middle" multifamily housing, specifically 2- to 4-unit buildings, saw a decline in the second quarter of 2026, according to analysis by the National Association of Home Builders (NAHB).
NAHB Chief Economist Robert Dietz reported that starts for these smaller multifamily projects fell to 3,000 units in the quarter. This continues a downward trend, with starts over the past year decreasing to 16,000 units from 21,000 in the preceding four-quarter period. As a result, these buildings now constitute only 3% of all multifamily development, a significant drop from their nearly 11% share between 2000 and 2010.
Dietz attributes the persistent underperformance of this sector to zoning and land-use restrictions. He warned that without "light-touch" density reforms, the supply of missing middle housing will remain constrained. The data suggests that while some governments are considering "gentle density" reforms, these changes have not yet significantly impacted national production levels for 2- to 4-unit buildings.
The scarcity of small multifamily units impacts housing affordability, as these buildings have historically provided more attainable options. Their diminished share of construction means markets are increasingly reliant on larger apartment projects and single-family developments in suburban areas to increase housing inventory.
Frequently asked questions
Missing middle housing refers to a range of housing types that are compatible with single-family neighborhoods, including townhomes, duplexes, and 2- to 4-unit buildings, offering medium density between detached single-family homes and larger apartment complexes.
NAHB Chief Economist Robert Dietz attributes the decline primarily to zoning and land-use restrictions, such as minimum lot sizes, parking mandates, and restrictions on attached housing in single-family zones.
From 2000 to 2010, 2- to 4-unit construction made up a little less than 11% of total multifamily starts. In Q2 2026, this share fell to just 3%.
What Happens Next
01Policymakers may consider "light-touch" density reforms to encourage small multifamily development.
02Entitled sites for small multifamily or medium-density formats may command a premium.
How It Developed
Missing middle multifamily starts fell to 3,000 units in Q2 2026.
Starts over the past year dropped to 16,000 units from 21,000.
Small multifamily buildings now comprise 3% of total multifamily production.
NAHB Chief Economist Robert Dietz attributes the decline to zoning and land-use restrictions.
