The Indus Valley Civilization (IVC) was a Bronze Age civilization (3300–1300 BCE; mature period 2600–1900 BCE) extending from what today is northeast Afghanistan to Pakistan and northwest India
At its peak, the Indus Civilization may have had a population of over five million. Inhabitants of the ancient Indus river valley developed new techniques in handicraft (carnelian products, seal carving) and metallurgy (copper, bronze, lead, and tin). The Indus cities are noted for their urban planning, baked brick houses, elaborate drainage systems, water supply systems, and clusters of large non-residential building
As far as is known, Indus Valley homes were built from dried or baked mud or clay bricks. Stones were not used. A few other materials were used to compliment the bricks to make the roofs, floors, interior walls etc. Although hundreds of sites have been identified, only three cities have been yet excavated. Harrapa was the first town discovered, but other cities are believed to have independent rulers, even though they are part of the same single state.
With few exceptions, most other buildings would be made from regular sized baked bricks throughout the town. Stone was used only very rarely in very important structures like a temple (although some archeologists dispute that the Indus Valley Civilization had temples or religious buildings). The explanation is two fold:
1) The lay-out and planning of Indus Valley towns was very structured. (It's much easier to make many bricks that are exactly the same than to cut stone in standard sizes, especially before modern tools.)
The Harappans used chisels, pickaxes, and saws...These tools were most likely made of copper
Every Indus Valley town used roughly the same city planning. They used the same standard sized bricks in their towns. The bricks invented by the Indus Valley Civilization were exceptionally strong and thus have still survived today, 4000 years later. While stone is still stronger, its difficult to cut exactly flat on four sides, so stone walls will be winding. The brick walls of Harrapa are very straight and that allows for the city to be planned into neat quadrants.
Each city in the Indus Valley was surrounded by massive walls and gateways. The walls were built to control trade and also to stop the city from being flooded. Each part of the city was made up of walled sections. Each section included different buildings such as: Public buildings, houses, markets, craft workshops, etc
The IVC also rebuilt their homes and public spaces on top of the old ones every few years, yet they were able to keep the straight angles in the city planning design due to using brick, because its easier to stack neatly with brick than stone without any extra efforts. Due to their geography, which caused constant flooding, these rebuilding efforts were constant. Stone is much more permanent and makes sense for most ancient peoples. But brick better suited the IVC.
The Harappans were excellent city planners. They based their city streets on a grid system. Streets were oriented east to west. Each street had a well organized drain system. If the drains were not cleaned, the water ran into the houses and silt built up. Then the Harappans would build another story on top of it. This raised the level of the city over the years, and today archaeologists call these high structures "mounds".
2) Drainage was very important and the bricks are a good building material to handle possible floods from the Indus River. (Brick is more porous than stone, so it allows water and moisture to move through it more easily)
Archeological evidence proves that Harrapa and other IVC towns experienced flooding from the Indus River. IVC towns have intricate drainage systems and earthlinks to protect the towns from flooding. It is theorized that the usage of brick was also developed as a protection.
Now, to the alternative possibilities presented.
Was stone rare?
No. Stone suitable for building was not rare. The civilizations that replaced the IVC used stone in building. Today in India especially it is possible to view many wonderful temples, monuments and palaces made from stone.
Was it too expensive?
The IVC were a trading empire and very egalitarian, so they didn't build expensive or fantastic homes. Still this is not a very good explanation since stone is a basic building material for ancient peoples and all advanced, agrarian civilizations (those with a writing system, trade network, organized government, etc) except the IVC. Building a permanent settlement takes a lot of effort and stone is the most permanent of all materials.
Brick made today is very inexpensive. Brick made in the Bronze Age was made by hand, so it was not inexpensive. The IVC brick represented technological advances, so significant effort was placed in improving it. This also is a cost we don't spend when we use brick, because brick never fails due to our lack of understanding in the best way to make it or to use it. There is some evidence, the IVC may have been transporting the bricks between towns. This is the reason the bricks are the same. The IVC domesticated the elephant and were among the first to develop an efficient type of wheeled transport. Transporting bricks is not any easier than moving stone from a quarry.
Over centuries time and the usage of bricks was perfected it probably became less expensive. When it was first being developed, it was probably more expensive. Therefore, the cost is not likely to be the reason the IVC are using brick, but rather that it represented significant advantages for them.
The best explanation that economic reasons could be involved is that the IVC may not have used slaves. Without slaves to work in the quarry, it becomes more viable to develop an alternative system (bricks) that was otherwise more expensive.