You might want to make the house at more of an angle then. Try to get it to match with the character. Look at screen shots from the game "Earthbound" and I think you'll good idea of the angle you need for the buildings. Right now it looks as though the character is prone on the ground and crawling, but you can easily fix that by putting the buildings at the correct viewing angle.
Edit: Here, just to save you some time:
Also huge image of a town from Earthbound composed of many screen shots: http://www.ebhq.net/maps/onett.gif
Anyway, try to make the buildings at that sort of angle/perspective. Make them more upright and taller. Make it so you can see more of the front side of the building rather than mostly seeing the top. Something along the lines of what I just posted would look best for the type of sprites you're using now.