Households are an institution because for the most part they consume goods and services as final demand. Some households sell scrap, but this is accounted for as a negative purchase (which we then take out and put into institutional sales). Owner-occupied dwellings is treated as an industry because home-ownership generates wealth (the home can be rented out to others or can save the owner from having to pay rent); this income is counted as part of GDP. This treatment is necessary in order for GDP to be invariant when housing units shift between tenant occupancy and owner occupancy.
Owner-Occupied Dwellings as defined by the BEA: A NIPA imputation that approximates the value of housing services provided to occupants who own their homes. This imputation is made so that the treatment of owner-occupied housing is comparable to that for tenant-occupied housing (which is valued by rent paid).