Why wasn't the entire neighborhood haunted?

I take it because the dead were focusing on Carol Ann.

I always thought it was all due to them digging up that swimming pool. I assumed that 'woke' them up the closer the digging got to the corpses. Remember they didn't move the bodies...

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Carol attracted them to their house by communicating with them through the tv. That was when the shot onto the wall and in to the home.

It's also stated by Craig T. Nelson's boss while they were up on the hill chatting outside that Carol Anne was born inside the house. Not sure if that has anything to do with it but it has always made me wonder.

No one knows and I refuse to spend a lot of time thinking about a situation. I just say its a plot hole and move on

At least you got confirmation that it's definitely not a plot hole.
The way I see it, Carol Ann was the focal point for the spirits. As someone else pointed out, since she was born in the house she was linked to them. That's why Tangina got mad a the psychiatrist in the third film. They managed to break the link but the sessions brought it back up and the spirits were able to find her again.

BUDGETARY CONSTRAINTS.