I tried placing a small house in this exact spot and it would not let me (I had to move it back one tile for it to place, I assumed it was the tree by the front stairs). However, when upgrading to a workshop I tried to place it level with the other small beside mine (for aesthetic reasons) and it fit just fine. I have another small in a similar location with a tree one tile away from the stairs that I will be upgrading today if work is light enough to allow me some farming time. I will report the results from that upgrade.
There is currently an open bug report for how certain house steps are handled. House steps should be treated like any other part of the house once we are able to patch it.
