I see it rather from the point of 'political demand'. Influential local families want their kids to be able to build a house locally. Available supply is limited, so they pressure the local government to have single family home zones.
@Jack V Savage is correct in saying that one answer to housing prices being driven up by increasing demand is to increase supply, but obviously supply cannot be pushed up infinitely and the supply must also be weighed in terms of quality and impact on society. It is not sufficient to counter-balance a new single family home area with a social housing high-rise building in the outskirts of the city. Not only does it not serve the same demand (people don't want to be forced to leave their area of the city as tenants or potential owners), but it also has negative side effects you cannot counter balance later whatever you do.