This is historically incomplete.

American cities were replete with dorm room style housing. These were especially popular with new migrants to the city.

An incredibly large percentage of apartments in cities like NYC are used as multi family housing with several housemates sharing them to save on rent.

The reality is that the reason such housing doesn’t exist/isn’t more widespread is because cities have passed laws eliminating them. Before the white flight to the suburbs, the attempt was to keep the poor out of cities where the rich lived by eliminating housing of this sort since the poor couldn’t afford single family housing.

This led to a proliferation of laws that required bathrooms and kitchens in every unit, etc.

It's easy to live in shareable spaces when you're young and unattached - it becomes a lot more difficult as you age and want to grow a family. I'm not sure I want the kind of life where I have to share a kitchen or a bathroom, spaces I consider very private, with people I'm not related to. Maybe this is a uniquely midwestern/American sentiment, I'm not sure. But I am confident that there are more people like me than there aren't. The picture of the American dream is familiar, it's a house with a car in the driveway. I feel that may just be who we are now, regardless of any way we used to be.

Edit cause I had more thoughts: Honestly, probably one of the biggest mistakes we've made as a country have been not putting up enough resistance to RTO. The single family home is, I believe, probably one of the nicest standards of living in the world. Plenty of space for hobbies and activities, privacy, usually some community among neighbors. The only problem is that it's hard to square the circle when it comes to single family living and living close to an economic hub. To afford this standard you have to live close enough to a hub that you can afford one of the well-paying jobs that exist there, but not so far that your commute significantly eats into your life. With RTO, I think we lost a pretty good opportunity to weaken our dependency on the geographic economic hub. We could have had a diaspora of knowledge workers which gave people the opportunity to pursue a better life at a lower cost, and we sorta just threw all of that away.

Isn't it also the fact the almost no one wants to live like that? The expectations has changed and there's probably little demand for such type of housing.