A lot of buyers want a single-family home though. It kind of sucks to have neighbors on the other side of the walls and ceiling, especially if the construction didn't include really good soundproofing.
Rowhouses are a really, really good sweet spot for affordable yet private as long as they have the good noise eliminating party wall, so I would support the government just mandating them being built this way (it doesn't cost that much more, but over time by driving out bad rowhouses, it would improve their reputation).
Rowhouses enable a density similar to apartment buildings while allowing privacy quiet, ownership of a yard and roof deck, the ability to tear down and build any way you like, and pretty much all the accoutrements of suburban living but just a little smaller. It's great to own the land under your feet and have no one below or above you.
the result of the above is four bedroom apartments have too much space with no purpose. Try to draw any apartment and you will quickly see.
Since you're talking about this you probably know this already, but Europe largely does not follow this rule, and doesn't really suffer from horrible fires.
You can't ctrl-c (Western) European designs and regulations into North America because the context is fairly different.
A lot of Europeans underestimate the cultural and legal differences between North America and Western Europe.
Mine isn't dark. Pick good ones. "X is bad because the bad Xs are bad" is not an argument. Demand good Xs then.
Horizontal suffers from (1) far less freedom. You can never tear your house down and build a different one. You can't build an addition in your yard. You can't build on an extra story or turn your roof into a balcony (2) Far harder to abate noise
Most are dark. It's a simple matter of the design, if you're not an end unit. If units are to be a solution to housing issues, someone has to live in the "bad" ones. If you're making new units, might as as well build ones without townhouses' weaknesses.
You can't tear down a single townhouse, they're structurally-reliant on their neighbors; you can't build on extra stories, that's also a structural issue and might break HOA rules. These hypothetical horizontal units can have yard space. Noise abatement is the same.
You're ignoring the main issue: getting people out of SFH, because they take up too much space. The point is to keep as many aspects of SFH as possible. SFH have access to light from at least 3 sides, so you have to have that. They tend to have only 2 flights of stairs for ~2000 sqft units; having 3 or more is often a dealbreaker. However, many SFH have detached garages; detached storage/private yard space is probably fine. So, I think this is a solution. If townhomes were the correct answer, they'd be more successful, and not just what people are settling for because they can't afford SFH.
Whether the construction costs, infrastructure costs, financing costs, etc. are affordable and worth paying is a matter that properly should only be answered by the specific individuals and organizations involved, with aggregated metrics only being relevant to analyzing results. If considerations involving those costs are directly involving people outside the local context, something is seriously broken.
All of these costs should ultimately be the responsibility of the home buyer, directly or indirectly.
And there is no meaningful social context that encompasses everyone, everywhere without regard for the specifics of their individual circumstances. Trying to approach complex social questions by using a Katamari-Damacy-style blob of everything rolled together as your unit of analysis is a sure-fire way of making those questions incomprehensible and intractable.