@marketurbanism writes a lot about this on Twitter.

The short answer is that zoning and building codes in the US make it especially uneconomical to build small apartment buildings the way they are built in most other parts of the developed world.

One big thing is that it’s practically impossible to build an apartment building with just a single staircase if it has more than 2 or 3 units. Our egress requirements create lots of wasted space, which raises costs. Keep in mind that despite onerous safety requirements like these in US building codes, our buildings are statistically less safe than those in western Europe where most of these restrictions don’t exist at all.

Here’s an interesting article to read on that issue.