Presumably it's cheaper to build a home when a developer is building a whole bunch at once in a neighborhood, as opposed to a single person or family ordering something custom built.
Developer is also a professional with experience/refinement so he knows the magic specs to make things, magic things to say in the emails to the bureaucrats, magic words to put on the applications to avoid getting fucked by a bunch of "you need a survey for this" and "you need an engineer for that" and "akshually since you've done this you need a new septic" type landmines that cost $1-20k individually the little guy is gonna run right into.
Cheaper, sure, but not cheap enough to satisfy anyone who already cannot afford a home. Like cars, the used market is always going to be a reflection of the new market. Used houses are expensive because new ones are even more expensive.
I think it probably could be cheap enough. Part of the issue is actually just that new home sizes keep getting bigger. Like yeah, new homes are more expensive now even in relatively cheaper parts of the countries compared to decades ago, but it's also true that the homes are much larger than they used to be.
A lot of the homes from the 50s and 60s that people talk about being very affordable at the time they are made, were very small things by today's standards.
That is quite true. Early Americans had absolutely no trouble living in their 300 sq. ft. log cabin with eight children under foot. You don't technically need the behemoths we see today (or even what we saw in the 50s, which were still huge by historical standards). But it remains, if it was cheap enough, people would already be doing it. The law sometimes gets in the way, sure, but that's another subject entirely.
The issue is that localities have mostly made adding new homes a big pain in the ass. If the new supply is constrained, obviously you're going to target the higher end of the market with whatever you do end up building.
The pain in the ass has a cost, certainly, but isn't anywhere close to being the large portion of the cost. Even if you eliminated that cost, the houses still wouldn't be affordable to the average Joe.
I think they could be, but a place where demand is high for housing but it's easy to build a lot more housing, that doesn't really seem to exist anymore.