Question: In the US, there are many large cities that are dominated by a single party. After Reconstruction and through the 70s, the Southern States were solidly Democratic.

There are often strong factions in these single party districts, but they do not become full parties with clear signalling mechanisms and separate governance structure. 

Why not? What are the theories of why local parties do not emerge?

Are there any examples of local parties emerging in the US?

Answer: 
My answer is a bit more narrow than the others. Third parties in the US are rarely successful due to the first-past-the-post voting system, otherwise known as winner-take-all voting.

Imagine that a party that mostly aligns with the democrats but has some slightly different views rises up in one area that has a history of voting about 60% democrats 40% republicans in most elections. When it comes to election time they've managed to sway about half of the democrat voters and the election results come out like this:

* 30% democrats
* 30% third party
* 40% republicans

The republicans win even though 60% of voters don't want them in government, at the next election, everyone gives up on the third party and goes back to voting democrat because they have the best chance of winning, the third party all but disappears and everything basically goes back to normal.

This is known as vote splitting and leads to factional divisions and power struggles within a party in favour of forming new parties, it also means that it normally takes a massive effort to upset the status quo of a political system that uses this voting system.

If you want to learn about alternative systems of voting I highly recommend watching CGP Grey's series ["Politics in the Animal Kingdom"](http://www.cgpgrey.com/politics-in-the-animal-kingdom/) and researching Condorcet voting.
In the United States, state and local governments have significant power. Many Americans are willing to move between parts of the country, especially in their early adult years. State and local governments have repeatedly imposed policies that encouraged people who agreed with the policy-makers to move to their jurisdictions, and encouraged people who disagreed with the policy-makers to leave. Over the course of a generation, this effect can be strong enough to lock-in the politics of a region. For example:

* During most of the 20th century, public education (or expensive private-school education) was mandatory for most children between the ages of 6 and 16.
* In places that concentrated control of large school districts, public education often became so poor that people who could afford to leave did. The emigration often was triggered by real estate "block-busting" or "forced bussing" of school-children.
* "Open-shop" and "closed-shop" laws for establishing and maintaining unionized work-places tend to change what kinds of jobs are available in a state.
* Alcohol sales are regulated at a state or local level. These policies often distinguish between different kinds of alcohol, in ways that make some ethnic groups comfortable, and encourage other ethnic groups to leave.
* Prostitution and gambling are also regulated at a state or local level. (Gambling laws have become looser, due to competition between Indian casinos and state lotteries.)
* Gun-control laws attract people who are afraid of guns, and repel people who own guns.
* Generous government benefits programs attract people who are eligible for benefits. The concomitant high tax rates repel people (and their employees) who are subject to the taxes.
* Major cities and "college towns" tend to disproportionately retain young people who did not "fit in" in the communities they came from.
* Some states have "growth control" laws designed to limit suburban sprawl. These laws tend to create an auction for a limited number of places to live. In-city homes tend to become very expensive. Young people delay marrying and starting families. Young families tend to move to places that allow building new single-family homes with yards.
* Some states have severe restrictions on nuclear power, coal-fired power, and automobile tailpipe emissions. These states also tend to have large subsidies for solar power and wind power. These policies substantially increase the cost of electricity and gasoline. Initially, these policies greatly reduced smog. The ongoing effect is hard to distinguish from a large tax increase.
* Many states have made it illegal to exercise one's conscience in choosing whom to interact with. The number of kinds of such regulated interactions is increasing.

Note that one major U.S. political party is associated with teachers' unions, other government employees' unions, closed-shop laws, gun control laws, generous government benefits programs, increasing taxes, growth control, "environmental regulations", and laws restricting freedom of conscience. Thus, most of these policies tend to reinforce each other.