It's hard to find a chrome moly bike for less than $1000 these days. Is it because it's actually less expensive to manufacture aluminum bikes these days or is the market for chrome moly bikes so small that economies of scale make aluminum bikes cheaper?
(I'll ignore the chain store things with two wheels and pedals, I refrain from calling those bicycles)
I ride a steel Hard-tail MTB, by choice, and found it easy to choose my bike - The choice was so limited it was a Jamis Dragon or aluminum...... I carry an extra couple of pounds over a similar spec, same price point aluminum bike. I traded my 10.5kg Aluminum framed MTB for a 13.5kg Steel......
Back in the 1990's the unwashed masses were taught that Aluminum was a superior material in every way, and most people still think so (Except those than can afford and want carbon). It does not rust, is lighter and stiffer and....) Most people, even those that should know better, think weight is God when comparing bikes, and measure it's advantages in $/gram saved. It takes skill to build a reasonably weighted steel frame, whereas any idiot can build a respectably weighted Aluminum frame (with skill, Aluminum will be lighter than steel). Theres even a web site dedicated to weights of bike parts....
Look at the Q and A's here- how many people state that "steel rusts and is heavy" - most of them will never have ridden, let alone owned a steel bike (except perhaps one of those cheap chain store things). Perceptions are steel is "So 1908's ...."
Now look at the cheaper end of the market - these are not typically serious riders. These are Novices relying on advice from friends and Salesmen. The ONLY thing they can use to compare bikes in a shop is weight. Even if they go for a test ride, they won't feel the difference between bikes, let along the subtle difference between a steel and alloy frame in the shop car park. The salesman knows this - so he sells "Weight is everything", and harps on about how every gram is critical. The up sell to the next model is then easy - it's so much lighter, and only another $100......
So put this together, people buying steel frames are few and far between. Those that do tend to know bikes and want a reasonably good one. Theres enough of a market to build steel framed bikes, but those customers know what they want and will pay a premium for it. It's fairly small, so the profit needs to from margin, not volume. As the market is not big enough for a major competition between manufacturers only a few play in it, and they can set prices accordingly.
Thats my guess anyway - not based on any provable fact.......
It depends on where you're looking. Used bikes-- Craigslist, eBay, even local swap meets/garage sales-- with steel frames are plentiful, and some are excellent bikes. For example, I got the 1983 SR Semi Pro pictured below for $130 off some local classified ads. 1500 miles later, I can tell you it is a great bike. All I needed to do was update the saddle, tires, and brake pads. Similarly, the Peugeot pictured below it was a garage sale score ($20). New tires, some tune-up work, new brake pads, saddle, etc., but it is a wonderful bike. Japanese-made frame, built like a tank, perfect for a townie. 1500 miles later, I can tell you, it is also a great bike.
So while I will agree, new steel-framed bicycles can be expensive, not all are.
Regarding new steel-framed bicycles, not all are totally pricey. In 2011 Specialized was selling a steel Allez, which was around $650 IIRC. BikesDirect also sells a number of steel-framed bicycles for less that $1000. You can go up from there...
The Novara Safari has a steel frame and is $899. And that was after just 15 seconds of searching.
But it may well be that many less-expensive bikes are being made in aluminum, since in some ways it's more conducive to automated production. Also, people who don't know any better consider aluminum to be a superior material, and the less-expensive bikes are marketed to people who don't know any better.