Most people do not want to be packed in tighter with other people,

There are more people that do than you would think. Young people that are tired of being forced to live the antisocial lifestyle inherent to suburbia. People that recognize they don't need all that much space or material things, that don't mind sharing their outdoor green spaces with the public in exchange for not having to maintain it and having access to much more diverse businesses and entertainment, but cant afford to move to a big city because the demand for housing in them far outweighs the supply.

Why do you think American cities are so expensive to live in, anyways? It can't be because nobody wants to live in them.

There are only a handful of cities around the country with tax revenue and infrastructure that hasn't been wholly cannibalized by surrounding suburbs, as suburban infrastructure simply cannot fully support itself. Suburbs frequently must dip into revenue from areas with more density, and mixed use zoning that is more supportive of small businesses and takes more efficient advantage of sales tax revenue. The roads that all those cars and big box stores and winding neighborhoods rely on don't fix themselves, you know, and that certainly is not a cheap task. Roads that were literally paved in the middle of cities over entire city blocks and still divide them to this day. That is why our cities have largely shrunk since the 50s, not some universal american attitude towards density.