All things being equal, companies want to sell as little as possible for as much as possible. We all want to make the most amount of money with the least amount of work.
You also need to factor in the time it takes to build a home. If I can build 100 homes a year I'd rather take $3m profit each year than build the cheaper homes for $2m profit. Sure, if I can scale up infinitely, then I'll go ahead and build infinite homes for infinite profit. But in the real world there is significant risk in scaling up. If I build too many homes and the prices go down, then I'm now hurting my own profits. It can be better for me to do the lower effort thing and build less for a higher profit margin.
You also need to factor in the time it takes to build a home. If I can build 100 homes a year I'd rather take $3m profit each year than build the cheaper homes for $2m profit. Sure, if I can scale up infinitely, then I'll go ahead and build infinite homes for infinite profit. But in the real world there is significant risk in scaling up. If I build too many homes and the prices go down, then I'm now hurting my own profits. It can be better for me to do the lower effort thing and build less for a higher profit margin.