The issue is that insulated walls make everything harder. Piping, wiring, etc. So any upgrade gets a lot more tedious (so expensive) and any repair similarly costs more. I also imagine a lot of property developers/construction firms are still wary after Asbestos and are just waiting for the shoe to drop on "Little Timmy poked a hole in the wall and started eating the cotton candy and died".

It also matters a lot less because of global warming but insulation also has strong implications on climate control where the idea is for the sunny side to diffuse heat to the shaded side of the building and so forth.

And I still generally don't think it is a major issue. Maybe it was city living for a few years but people generally are good about not being loud outside of "waking hours". Sure you might hear some moaning and creaking through the wall but most people aren't into vigorous tantric sex so that lasts 30 minutes at the worst. Yes, sometimes you do get that obnoxious asshole who spends every night composing a symphony. But most people who are loud just genuinely don't know they are being loud because nobody has ever talked to them.

The one time I did live near a hell neighbor? I just went down to the hardware store and bought some sound baffling and put it up in my bedroom with bluetack. Didn't cost much and I assume it has gotten even cheaper now that everyone and their mother is A Streamer.