Yes, we might move to smaller homes in much denser housing models to increase housing. With that perspective, we can just build glorified chicken coops for humans too, however no one would like to live that cramped.
Optimization for economic indicators tend to erode the things humans enjoy. High quality goods? Too expensive to produce and lasts too long to be economically viable. Low-density neighborhoods with nice, open spaces? Inefficient land use, long commutes, etc. In return, when a person wants to enjoy life, it becomes impossible, because enjoyment becomes economically not optimal (or viable).
The current system is a trade-off between comfort and economic indicators. There can be other ways, I think. Maybe increasing working from home to reduce commute where possible, moving work to neighborhoods instead of moving people to work, etc.
I do not know dynamics of USA very well in this regard, but it looks like this situation is the result of "money first" philosophy (i.e. strong capitalism), instead of being human first.
When people see people as "expendable workforce", they can normalize "putting" people into glorified chicken coops.