A family will stock their home with food and fuel to keep themselves well fed and warm. As the family grows, children that reach adult age will start looking for their own home and a spouse. Unless empty homes are available, they will continue to live with their parents, and produce no children of their own - each house can hold up to 8 people.
Later on in the game, you will want to upgrade to stone houses, as these use less firewood to keep warm.
There are 6 different types of wooden house - press
f when placing the house to cycle between the styles.