To reproduce:
Add a RadListView set its settings as follows:
this.radListView1.ViewType = Telerik.WinControls.UI.ListViewType.IconsView;
this.radListView1.ListViewElement.ViewElement.Orientation = Orientation.Horizontal;
this.radListView1.ItemSize = new Size(200, 200);

Add items:
this.radListView1.Items.Add("Item");
this.radListView1.Items.Add("Item");
this.radListView1.Items.Add("Item");

Lower the height of the form until its lower than the height of the items. You will notice that the items are moved to the right

Workaround:
public class ListView : RadListView
{
    protected override RadListViewElement CreateListViewElement()
    {
        return new ListViewElement();
    }
}

public class ListViewElement : RadListViewElement
{
    protected override BaseListViewElement CreateViewElement()
    {
        if (this.ViewType ==  ListViewType.IconsView)
        {
            return new IconsViewElement(this);
        }

        return base.CreateViewElement();
    }

    protected override Type ThemeEffectiveType
    {
        get
        {
            return typeof(RadListViewElement);
        }
    }
}

public class IconsViewElement : IconListViewElement
{
    public IconsViewElement(RadListViewElement owner) 
        : base(owner)
    {
    }

    protected override VirtualizedStackContainer<ListViewDataItem> CreateViewElement()
    {
        return new IconsListViewContainer(this);
    }
}

public class IconsListViewContainer : IconListViewContainer
{
    private Rectangle clientRect;

    public IconsListViewContainer(BaseListViewElement owner) : base(owner)
    {
    }

    private bool Grouped
    {
        get
        {
            return this.owner.Owner.ShowGroups && (this.owner.Owner.EnableCustomGrouping || this.owner.Owner.EnableGrouping);
        }
    }

    protected override SizeF ArrangeUngroupedHorizontal(SizeF finalSize)
    {
        if (this.clientRect == null)
        {
            clientRect = (Rectangle)
                this.GetType().BaseType.GetField("clientRect", System.Reflection.BindingFlags.NonPublic | System.Reflection.BindingFlags.Instance)
                .GetValue(this);
        }

        float x = clientRect.X + this.ScrollOffset.Width, y = clientRect.Y;

        float maxHeight = 0;
        float maxWidth = 0;

        foreach (RadElement element in this.Children)
        {
            BaseListViewVisualItem visualItem = element as BaseListViewVisualItem;
            if (visualItem == null || visualItem.Data == null)
                continue;

            Size elementSize = this.ElementProvider.GetElementSize(visualItem.Data).ToSize();
            maxHeight = Math.Max(maxHeight, elementSize.Height);
            maxWidth = Math.Max(maxWidth, elementSize.Width);

            if (y + elementSize.Height > clientRect.Bottom && y != clientRect.Y)
            {
                y = clientRect.Y;
                x += maxWidth + this.ItemSpacing;
                maxWidth = elementSize.Width;
            }

            if (x == clientRect.X &&
                this.Grouped &&
                (this.owner.Owner.Groups.Count > 0) &&
                !this.owner.Owner.FullRowSelect)
            {
                x += this.owner.Owner.GroupIndent;
            }

            RectangleF arrangeRect = new RectangleF(new PointF(x, y), elementSize);
            if (this.RightToLeft)
            {
                arrangeRect = LayoutUtils.RTLTranslateNonRelative(arrangeRect, clientRect);
            }

            element.Arrange(arrangeRect);
            y += elementSize.Height + this.ItemSpacing;
        }

        return finalSize;
    }
}