Another explanation is that the average new house costs more than it used to. Housebuilders have chosen to build bigger homes at a higher finish level because there's more profit in it. New affordable housing is becoming rarer.
Another factor here is the rising costs and complexity of zoning/permits. In my area it will cost you 6 figures just to put down a foundation with the paperwork. This puts a floor to how cheap a house can be and what is financially viable to build.
