Many of the carriages were used as scrap metal for WWII, and once cars took off the demand wasn't there to rehabilitate them. But it would be so much cheaper to build out than even just replacing the signals in NYC would be. All the right of ways are still there, many of them turned into bike trails (which is great, but I'd rather have a $5 ride to the next town over)
The carriages back in the day were pretty slow, maybe 20mph, so I get why cars won, but rebuilding this infrastructure with modern equipment would be a really nice situation, and if gas was 10$/gal we would probably see the demand, but as long as gas is cheap we lack the ability to plan ahead...