There's a complex relationship between land values, development costs, development financing, and the overall demand for housing, but all of it adds up to an incentive to only build housing when there is excess demand. Financing from banks is dependent on projecting a certain amount of profit from building housing. Owning land has almost no real carrying cost. Developers build when the market is going up, and they sit tight when the market is down, which creates a ratchet effect. Housing gets built when it's in high demand, and building stops when the demand wanes. Because of how long it takes to get a development done, how many steps there are, and how much planning is involved, there's no situation where developers accidentally build way too many houses.
Housing isn't built by "companies" in the way that products are built. There's no house factory that gets ramped up and needs to keep producing and growing production, with unit costs going down and there needing to be a certain steady production in order to maintain the value of the factory as an asset. Housing requires the coordination of land, developers, tradespeople, investors, banks, local government, and so on. Every housing development, from a single spec or custom home all the way up to a high-rise apartment building or suburban housing development, is essentially a separate enterprise that spins up and winds down in the space of a couple years. The structural elements are closer to infrastructure development than consumer products, so the whole exercise of lowering the per-unit costs and then selling more volume doesn't really apply.
The closest thing to how this works in the market is that the per-square-foot value of a housing unit is the main metric for real estate investors/developers/owners, while the housing unit itself is the relevant metric for actual customers for houses. Housing units can get smaller, and therefore cheaper on a per-unit basis, while the per=square-foot value goes up. We're running into the limits of that math now, as tiny condos are selling for the upper-limit of what people can afford while being basically as small as you can make them while still qualifying as dwelling units.
That's a bit of a ramble, someone else can correct me on the finer points, but the gist is that, no, companies are not incentivized to make housing cheaper. If housing got cheaper, it would mean the underlying asset was going down in value, which means landlords and developers have less incentive to start new construction projects. They just wait for housing to be expensive again and then start building. The only way to combat this would be decommodification of housing combined with some sort of state program to either build housing directly, or incentivize building housing counter-cyclically. As long as housing is a commodity, and development is driven purely by profit motive, housing will always get more expensive.
Edit: One more thing, land is a major limiting factor, not just because there's a fixed amount of it, but also because densification of land has diminishing returns. Tall buildings are an efficient use of land when you want density, but on a per-square-foot basis, tall buildings are vastly more expensive than smaller ones. What that means is that economies of scale don't work the way you think they would for building. Suburbs make sense, economically, because although the land use is high, the cost to build is relatively low, whereas a big residential tower might cost 3x/4x/5x as much to build in terms of the actual livable area. You can't just sprawl forever, and you can't just build higher and make up the cost in volume, so there's no way to drive unit-costs towards zero like with consumer products.
There's a complex relationship between land values, development costs, development financing, and the overall demand for housing, but all of it adds up to an incentive to only build housing when there is excess demand. Financing from banks is dependent on projecting a certain amount of profit from building housing. Owning land has almost no real carrying cost. Developers build when the market is going up, and they sit tight when the market is down, which creates a ratchet effect. Housing gets built when it's in high demand, and building stops when the demand wanes. Because of how long it takes to get a development done, how many steps there are, and how much planning is involved, there's no situation where developers accidentally build way too many houses.
Housing isn't built by "companies" in the way that products are built. There's no house factory that gets ramped up and needs to keep producing and growing production, with unit costs going down and there needing to be a certain steady production in order to maintain the value of the factory as an asset. Housing requires the coordination of land, developers, tradespeople, investors, banks, local government, and so on. Every housing development, from a single spec or custom home all the way up to a high-rise apartment building or suburban housing development, is essentially a separate enterprise that spins up and winds down in the space of a couple years. The structural elements are closer to infrastructure development than consumer products, so the whole exercise of lowering the per-unit costs and then selling more volume doesn't really apply.
The closest thing to how this works in the market is that the per-square-foot value of a housing unit is the main metric for real estate investors/developers/owners, while the housing unit itself is the relevant metric for actual customers for houses. Housing units can get smaller, and therefore cheaper on a per-unit basis, while the per=square-foot value goes up. We're running into the limits of that math now, as tiny condos are selling for the upper-limit of what people can afford while being basically as small as you can make them while still qualifying as dwelling units.
That's a bit of a ramble, someone else can correct me on the finer points, but the gist is that, no, companies are not incentivized to make housing cheaper. If housing got cheaper, it would mean the underlying asset was going down in value, which means landlords and developers have less incentive to start new construction projects. They just wait for housing to be expensive again and then start building. The only way to combat this would be decommodification of housing combined with some sort of state program to either build housing directly, or incentivize building housing counter-cyclically. As long as housing is a commodity, and development is driven purely by profit motive, housing will always get more expensive.
Edit: One more thing, land is a major limiting factor, not just because there's a fixed amount of it, but also because densification of land has diminishing returns. Tall buildings are an efficient use of land when you want density, but on a per-square-foot basis, tall buildings are vastly more expensive than smaller ones. What that means is that economies of scale don't work the way you think they would for building. Suburbs make sense, economically, because although the land use is high, the cost to build is relatively low, whereas a big residential tower might cost 3x/4x/5x as much to build in terms of the actual livable area. You can't just sprawl forever, and you can't just build higher and make up the cost in volume, so there's no way to drive unit-costs towards zero like with consumer products.