Yes, it was an overreaction. He should have accepted your husband's apology and moved the vehicle. He could have (politely) admonished your husband to make sure that your guests don't park in resident spaces, which is what you should have done.
I've posted about parking problems in our area before. The thing is, illegal parkers think, "it's just once, for a little while," and then they get upset when they are bawled out or towed because "they" only did it "once." Well, you and the other dozen or more people that month who think that it's okay to park on private property, in marked spaces, handicapped spaces, and so on.
I have a friend who owns a business across the street from a restaurant with which he is not affiliated. He's put up signs warning people that he will tow illegally parked cars, but they park there any way. He got mad at a woman who was getting back into her car illegally parked at his business. What he said was probably not e-hell approved, but he let her leave without towing her car. She thanked him by writing an untruthful Yelp review of his business.