In March of 2005, 52,000 new homes were sold at prices of less than $200,000. At the bottom of the crash in March 2009 that number had dropped to 14,000. The Fed instituted ZIRP and QE around that time. Sales of homes under $200,000 totaled 9,000 units in March. With sharp price rises builders have found it more profitable to build fewer but more expensive homes than selling more lower priced homes where profit margins have all but disappeared.
The Fed has promoted this distortion by enabling builders to finance their construction and holding costs of inventories at zero in real terms. 
Land and permitting costs drive much of the pricing here in eastern Massachusetts. Regulation has gotten to where it has significantly affected the cost of construction. New and progressively more stringent energy codes has driven the price of insulating a home 3 to 4 times what it was 15 years ago in addition to more costly inspections. Due to new high wind codes a home that would have about $200 worth of hanger 10 years ago now has about $3000 worth of hanger, tie downs, and rafter clips and you have to pay someone to install them. Insurances and taxes have skyrocketed in recent years.
I could go on and on, the government does not want builders to built reasonably priced homes, cheaper homes mean less property tax. They will demand that we build a number of expensive homes and sell them cheaply to people who can game the system, in order for us to get our permits. We have a couple in a subsidized home that we built for them that they paid less than our actual construction costs. They have two $40,000 SUVs in the driveway along with an antique Firebird under a cover. They paid well under $200,000 to live in this community of $600,000 to$700,000 homes. Their kids get to go to they same tony suburban schools as the people who paid full price. Great system for them, not so much for those of us footing the bill.
We could easily build inexpensive homes, the government has an abundance of land it could release cheaply. Many regulations could be relaxed with no real harm. Between the nymby crowd and the over burdensome government you will not see homes built inexpensively any time soon. On the bright side we have 4 ongoing subdivisions and they are selling as fast as we can build them.
Bob.
The real enemy leaves a trail of destruction everywhere it goes.
Bob,
Pretty much the same everywhere with a few exceptions.
Makes no sense to pay $75,000+ for permitting, hookups and such then put a $100,000 house on it when you can put a $500,000+ house on it for the same initial input costs.