It is a term used in the context of the two truths, and it is the antonym to the term Sammuti, which means conventional.
According to my understanding, ultimate reality is that which is directly experienced, and conventional reality is conceptual. To borrow your example of a house, the ultimate reality is the set of experiences which you have, such as the seeing, hearing, smelling, and touching of the house (you could include taste here, but I don't know of many people who lick their houses).
Based on these experiences which arise and cease, the mind generalizes a concept, in this case the concept of house, and this concept of house doesn't exist as a direct experience, so you can't call it ultimate reality. You can't say categorically there isn't a house however, as the concept of house is based on experience and is consistent with direct experience, so we say that it exists, but in a different sense. That is to say, we say the house exists in a conventional sense.
That's how I understand the distinction between ultimate and conventional reality anyways. There are probably other and more precise definitions out there, but I think this is a good practical way of understanding it.
The non-doing of any evil,
The performance of what's skillful,
The cleansing of one's own mind:
This is the Buddhas' teaching.