After his curse was lifted, the reason for his exile from his village no longer existed. His relationship with San also showed no signs of developing further.
But he decided to remain in Irontown.
Since he is a prince of his people (and the last one to boot), wouldn't it be more logical for him to return home?
I have a couple arguments on why he no longer returns home.
The first is that his banishment forbids him from doing so. Ashitaka cut his own hair which symbolizes him losing his culture and heritage. Kaya also gives Ashitaka her dagger because she wanted him to have a memento of her. It shows that he is no longer allowed to come back to the village.
Another argument is that he no longer has a way of returning home. In the scenes following Ashitaka leaving the village, it is apparent that he has traveled a great distance from his village. Most likely he has forgotten the way home.
Lastly, he could have stayed behind out of consideration for the others. Mononoke-hime is the person he loves and he wants to stay with her. It is possible he also wants to forge a good relationship between Irontown and the forest so that future demons won't come and attack his village or other villages. Furthermore, his elk was shot and probably can't go as far as it once could. So he stays out of consideration for the elk, since it's possible the elk would not have been able to make the journey.
This is what director Miyasaki says:
Ashitaka is at a loss as he comes into the outside world, that is, town, from his village. At this point, he is hiding his face to show that he is a non-person. Actually, at the moment he cut his topknot off, he was no longer human. Cutting one's topknot in a village has that meaning. So, it looks like Ashitaka leaves (the village) of his own will, but actually, the village forces him to leave, I think. Ashitaka, as such a boy, cannot negotiate well when he goes to the market. The Northeast area, where Ashitaka's village was, used to produce gold. So Ashitaka just offered a gold grain instead of money, not knowing the value of it.
And...
- How about going back to the Emishi's village?
M: He can't go back. Even if he could go back, what would be there? There might be some time lag, but eventually, the world of what Eboshi has been doing at Tatara Ba will come rushing in. So if Ashitaka says "I will go home" since his curse was cured, that will be no solution. And it will be a big problem if he brings San back.
- Kaya, who saw Ashitaka off, loved Ashitaka, didn't she?
M: Yes of course. She calls him "Anisama (older brother)", but it just means that he is an older boy in her clan.
- So they are not real brother and sister.
M: If they were, that wouldn't be interesting at all. There used to be a lot of marriage among blood relations in Japan. I thought of Kaya as a girl who is determined to do so (marry Ashitaka). But Ashitaka chose San. It's not strange at all to live with San, who lives with such a brutal fate. That's life.
Source:Miyazaki on Mononoke-hime
Take this with a grain of salt because I’m just taking a wild guess. In the beginning of the movie, one of Ashitaka’s village higher ups said something about their tribe being driven out 500 years ago by the Shogunate, so they probably wanted nothing to do with them anymore. The Emishi tribe seems like a tribe that takes pride and really value own culture it is likely they don’t want involvement from any outside parties/influences. Ashitaka took the desicion to journey outside of the tribe’s area and cut his hair as a symbol to cut his lineage and involvement with the tribe, so that’s probably the reason why they seemed so sad and lost all hope, it wasn’t because they didn’t think he’d make it, but rather even if he did make it alive, he can’t go back anymore.
The reason why is cause his curse wasn't lifted. It's still there just it is not progressing faster as it did before
