In order to setup a House Go to Pupils then Groups ensure you have Houses selected under Display Options:

This will allow you to see:

Click on Add New House:

Complete the form, as this is a house if you want this to be a continuous groups over several academic years you can select permanent otherwise the current academic year.

Provide a Title and a description.

Save – and this will then take you to the screen where you can add Pupils to the House:

Use the picker and add the pupils to the House, once you have done so Go to Pupils – Groups and you will see the House in the House list: