Why do we bless houses (and almost anything else that we can sprinkle) with water?
Many years ago, when I was yet a deacon, I was visiting with some non-Orthodox friends who were inquirers into Orthodoxy (they sadly, never followed through with their interest - or even their promise to become Orthodox) and we were discussing this topic in the context of blessing their house. I look at it like this. This world, this creation, is in captivity; it is enemy held territory. The evil one, having enslaved all of creation at the fall, has laid claim to every nook and cranny of this earth. And for a while it looked as though he might be able to hold onto it. But then he reached too far and attempted to enslave the Master of All and to bind Life with the chains of death and his power was broken. But creation is still fallen, it is still contested land in the spiritual battle.
We, as Christians, are engaged in this struggle to reclaim fallen nature for the Kingdom of God. We often talk about this in terms of our own salvation, but the Church, addressing all of creation in a wholistic manner, also reaches out and reclaims a bit here and a bit there of creation in general. We do this in order that we might restore the usefulness of creation for working out our own salvation. Hence we bless anything that might help us in our salvation - and by blessing it we reclaim it for the Kingdom of God.
There are few things more vital to our lives than our homes. In our homes we pray, we work, we talk to others, we order our lives, we work out our marriages, etc. What more important place to reclaim for the Kingdom of God - or is it better to continue living in a place which is occupied by the enemy. For the most effective working out of our salvation, we must drive the enemy out of our homes, and keep him at bay by our prayers, our righteous life, and the annual sprinkling by Holy Water at Theophany.