HTML5 was created by WHATWG (not W3C) in 2004. WHATWG was formed specifically because W3C had abandoned HTML in favor of XHTML. Only when it was clear that XHTML was a failure did W3C abandon it and join forces with WHATWG in 2007.

In other words, W3C missed the boat on this. I don't think it's to their great credit that they joined a three-year-old effort after it was already clear that the whole industry was headed towards HTML5 and not XHTML.