You can choose the size of the house when you're first consulting with the villager in the office, before the deco-fun starts. You'll be able to choose from a variety of room sizes and configurations. If you later decide that you want to change the number of rooms, you can go back and re-design the house.
If I can find a good post out there in internetland that shows the various configs, I'll update this post here.
UPDATE: The incomparable TBT forum user Jinglefruit has a couple of tumblr posts about room layouts. (Their tumblr is absolutely worth checking out for lots of HHD antics, play, and delightfulness.)
Thanks you're the best! I'll check it out! Really looking forward to this game now