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In recent years, states and municipalities have taken steps to reform land use and zoning regulations. While prior research documents that density zoning contributes to residential segregation on the basis of income and race, the mechanisms remain largely unexplored. In this paper, we examine the relationship between density zoning, neighborhood type, and residential segregation. To do so, we use a national dataset of building footprints and machine learning to develop a neighborhood typology based on building characteristics. We then use land cover data to examine changes in building development in these neighborhoods between 2001 and 2019. Finally, we pair these data with demographics at the municipality level to examine changes in income and race between 2000 and 2020. In cross-sectional analyses, we find that density zoning is strongly associated with building characteristics and the presence of different neighborhood types. Although we find that density zoning is also associated with income and race, the effects are attenuated when accounting for neighborhood types. Our results provide new evidence into the ``chain of exclusion" between density zoning and residential segregation, as we find that density zoning is primarily associated with reductions in the supply of single-family housing along the urban fringe. Lastly, we find that maximum density restrictions and changes in maximum density cannot explain the changes in demographics that we observe during this time period. We do, however, find some evidence of a relationship between changes in building development and changes in demographics. These results demonstrate the potential effects of upzoning policies.