Definitely is a negative feedback loop. So I expect the trend to accelerate as long as foreign investment keeps flowing into the US in the same rates
If the housing supply actually matched demand, the housing market becomes unattractive for speculation.
If foreigners are buying houses just to park their money, building more housing to meet the demand helps to alleviate that. This situation feels like a case where regulations designed to prevent housing supply from sitting empty can make sense but I have no evidence or story on how would need to be implemented to achieve that goal without negative unintended consequences.