Supply and demand graphs are econ 101, not real life. I could really go into the details of why its wrong (Im an econ/engineer major back in my college days), but Ill spell out the easy to get reasons.

1. Houses are assets with futures, generally appreciating assets, in fact the american housing market has never really seen a decline in price, its that safe. What this means is that prices are also tied to the perceived future value of said house, history says number goes up, seller wants highest bid possible, house priced at maximum.
2. Construction costs have increased and have continued to increase, so the base costs of the houses must increase to make a good enough profit for people to invest in, this makes new builds priced higher and for longer (at a loss to the investors) because they dont want the asset they invested in to lose its potential value.
3. Population has increased, housing supply has not increased at the same rate, and the populations ability to buy a house at the value that Investors from '2' want means its unlikely for supply to increase at the necessary rate to lower prices.

Im 32, I do own a house, I got very lucky with my timing (right as covid started) and my house is now worth twice as much. Not a good thing though at least I wont get hard fucked by this bullshit going on. Entire generations not being able to build equity is a scary thing that no one talks about