Slightly misleading description. It's not enough to build the small house, you have to build all three wings to the house and then remodel the front house into an entryway to earn this. And you obviously have to do this three times at the three plots of land.
The three lands for each house can be bought from the Jarl or Steward of Morthal, Dawnstar and Falkreath. You have to have done the quests to earn their favour (e.g in Falkreath, you have to get some mead and then kill some bandits).
You will need a ton of items to build each house. Each land comes with a chest with just enough items to build the beginning small house. Each land also comes with a drafting table, a carpenter's workbench and an anvil. You select a design from the drafting table (at first you have to build what is there but later you can choose between three different rooms for each wing of the house).
The main items you will need will be Iron Ingots, Sawn Logs, Quarried Stone and Clay. Iron Ingots can be turned into various items (nails, locks) at the anvil next to the crafting workbench. Buying them at any blacksmith is the fastest way to gather them (assuming you've amassed a large amount of money anyway).
Sawn logs will be required in just about every part of the house. These can be bought at any lumber mill, although the one the game indicated me to had nobody to buy from. I used Anga's Mill near Windhelm. Anga will sell you 20 logs for 200 gold.
Quarried Stone and Clay both have sources on each land, the trouble is finding them. Quarried Stone glows slightly silver and is usually right next to rock walls. Clay is on the ground and glows bronze.
There is a book on each Carpenter's Workbench called 'The Beginner's Guide To Homesteading' which goes into more detail about the different rooms you can build. It also explains how to make a home child friendly. You can also decorate the interior of your house and add stuff like a stable, but this isn't required for any achievement.
All in all, a pretty easy achievement if you're loaded with gold like I was. I had about 130k at the start of this and finished with about 110k (though I sold some stuff in between) so it isn't too costly. Hopefully this solution will help you guys out with some of the problems I came across.
Thanks also to Pyro1099 who added: "You will need around 500 pieces of wood for all 3 houses, about 200 quarried stone which is mainly used for the cellars, 300 iron ingots and you don't need to build misc builds i.e smelter."