Like many other cities, Denver experienced a sharp decline in construction of new houses in the years following 2006. Many carpenters, roofers, and other skilled workers left the area or found jobs in other industries. In addition, builders stopped buying and preparing home lots for construction. According to an article in the Wall Street Journal, by 2014, as consumers increased their demand for new homes in Denver, "New-home prices have surged over the past two years ... amid a shortage of home lots and skilled construction workers."

C) smaller because supply is more elastic over time.

Explanation:

Since the total quantity supplied of new homes had decreased so much during the last recession, the quantity demanded exceeded the supply by far, which causes a shortage that results in a price increase.

As the demand for new homes grows and stabilizes, the suppliers of new homes will adjust their production levels to satisfy the increase in demand. Since the supply is generally very elastic, the price of new homes should also stabilize and future price increases (if any) should be smaller.