Why does this matter? The problem stated is lack of supply generally, not that people want bigger homes, right? Who cares if people are parking their money in a bigger home if they only have a single home?
The lack of supply is because of a lack of desirable land. I don't think viewing it through the lens of "houses" getting more expensive is correct, as many old homes being purchased for 500k+ near me will be immediately torn down. There's a finite supply of land in driving distance of a city and bigger suburban houses mean less homes can be built. If you don't view it like that, bigger homes still require more materials and man-hours.