Aishah RA reports that Rasulullah SAW said:
"Verily Allah has not commanded us to clothe stone and sand." (Sahih Muslim, Sunan Abu Dawud)
The Ulama have explained the meaning of the above hadith that tradition of hanging decorative cloth on the walls of the house is reprehensible, as it is a waste of money.
It is also proven from preserved narrations that decorating the wall with cloth was also disliked by the Sahabah RA, for example - Abu Ayyub Al-Ansari RA and Salman Al-Farisi RA.
However, it should be remembered that if one needs to curtain a window or a doorway in his house, this will be permissible based on need, especially for the purpose of Hijaab and segregation.
(As based on explanations in Fathul Baari, Al-Mufhim (Imam Qurtubi RA), Raddul Muhtaar, and Fataawah Hindiyyah)