Remember that customisable housing means lots of art resources, and it would have to be constantly expanded, and if you want your house to look different to everyone else's (remember, pretty much every Sunsong Ranch looks the same) then they need a lot of furniture or whatever with many different appearances to go with it. It'd be at least as much work art-wise as a decent sized dungeon (that doesn't recycle any art assets).
Blizzard has a big list of shit they could do and next to each item is effort versus reward. Player housing is a medium to high on the effort, but low on the reward and as such it is down the list.
I'm sure if they suddenly thought of something totally kickass they could do with player housing, they'd do it. Which is pretty much how Sunsong Ranch came to be.