First of all, I don't have the money to buy a 200-dollar wooden doll house kit. And secondly, right now I don't have the time to put together a kit like that. I needed a simple and inexpensive way for us to have a fun, usable doll house. The perfect thing ended up being a small wooden bookshelf like you can buy at A.C. Moore or Michaels. I realize that even these can seem expensive, but we found one of ours at the thrift store. The second one I bought new, but if you check your Sunday paper, oftentimes you'll find really good coupons for stores like A.C. Moore and Michaels.
You can see us sitting in front of it playing. It is not fancy, but there are so many crafting hours and good memories tied up in this doll house. I believe that someday I'll have a fancy doll house -- maybe for grandchildren, or maybe for my daughter and me to work on when she's in her teens, or grown. For now, though, this is perfect. We made a trip to a store that sells scraps from area businesses and stocked up on paper, wallpaper supplies, little carpet pieces and little pieces of wood. A thrift store offers much the same by way of old books that you can get pictures from, fabrics that can be cut up and reused, and little miscellaneous items that can be recycled into doll house furniture. Get creative!
In addition to the wooden shelves (if you want to go totally frugal) we decorated two cardboard boxes as two little "loft" rooms that sit, one atop each wooden shelf. We used glue -- you can use either fabric glue or a hot glue gun (just be careful and supevise!) -- to apply the fabric. The room above is nothing more than adecorated cardboard box.
We have splurged from time to time and bought some wooden pieces new (remember those coupons and always look for sales). We've also judiciously picked out some wooden pieces at The Dollar Tree. Some of the above we made ourselves, and I'll post individual instructions about what we all we make.
The kitchen probably holds the least homemade furniture. It is also, for now, a room that's not fully decorated yet. As for the furniture, we lucked out and found the big stove at the thrift store for 99 cents. The table and stools against the wall were a gift. They are currently decorated for Christmas with pipe cleaners. (Remember it's a 10-year-old girl decorating the rooms.) The pretty green table and chairs were a splurge with a coupon.
Another cardboard room (above), the bathroom, with a pretty fireplace made from a paper-towel roll. I'll post instructions on making this later. My daughter likes for this to be the bathroom so the dolls can be warmed by the fire when they get out of the tub. The tub is a recycled soap dish from the thrift store.
One of the rooms in the wooden shelf (above). Do you see Santa hanging by the chimney? Mother is sitting by and the kids are in bed. Perhaps she is making sure they go to sleep. This room has been wall papered with wall paper scraps and glue. The windows were drawn first on drawing paper with colored pencils and then cut out and Mod-Podged into place on the walls. The same goes for the pretty fireplace. My daughter made the large bed out of a recycled metal tin.
All of the above was inexpensive and fun! It just takes time, but the memories you'll create and the talks you'll share make it so much better than something ready-made.
Lynn
PS - Disclaimer: Please just remember to always supervise the use of craft supplies, scissors, glue and glue guns, etc. And remember that small pieces represent a choking hazard for small children. Supervise. :)
I wrote a little note to my daughter and Mod-Podged it to the back of the house. It's dated, with a special love note from Mommy. It tells her that Pinky and Paisley (the dolls) are faerie-like forest creatures that live deep in the woods. They love human food and will borrow it (steal it?) whenever they get the chance. 
This cute little group of baby woodland creatures sits in a pretend stone hollow at one end of the downstairs. I cut the picture from an ad in a ME magazine.
