I get supply and demand. Are you sure about some of those assertions? Inflation, both on materials and labor, must still be a significant factor in keeping prices high - even if not at the levels previously seen. There’s still a housing shortage too, at least from my view (Michigan).
The housing market is really just now experience lower prices. It takes a while for sellers and builders to emotionally accept a new reality. They may think the downturn is only a short-term thing. They are wrong.
Some sellers have to sell and builders have to reduce their inventory because interest on construction loans really start hurting after six months and banks will not be all that sympathetic about repayment.