This way of building is also the root of urban sprawl, and all the infrastructure problems associated with it.
It is not typical in the US to raise a family in an apartment in a high density neighborhood.
There are exceptions, but typically only younger or lower income people live in apartments in the US. Pretty much everyone else aspires to have a house with a yard.
There are all sorts of legal impediments to infill development. Some people want one thing. Yes, plenty of people want suburban living. But there are enough exceptions that demand for city living is greater than supply more so than for suburban living.
To be honest, I'm not sure this is exclusively the case. Older neighborhoods with more density and mixed use are so in demand they will sell for 2-10x as much as suburban counterparts. It's just that they are illegal and can't be built.
There seems to be an insane demand for mixed use and medium density housing that is close to services, jobs and transportation. Imagine, never having to commute again. Living next to a walking path that is quiet and well maintained where you can take your kids for a walk. Even better, a 5 minute walk away is a grocery store and an ice cream shop that your kids can walk to safely without ever crossing a dangerous road.
There is a demand, just no supply!
Supply side reviewing past sale’s history and deciding to sell some twist on a past thing that sold creates an “take it or leave it, because we decided this was most likely to sell” market dictated by supply sides review of the past.