"When I was young I used to live in a house" strikes me as a sentence that expresses a deviation from the norm or is indicative of something that makes one stand out from the crowd.
Many years ago most people lived in cardboard boxes, but when I was
young, I used to live in a house.
The next one would perhaps be used in a more sequential way:
When I was young, I lived in a house. After I had made my first
million, I moved to a castle.
The continuous form strikes me as the start of an exciting story:
When I was young, I was living in a house, and there was this man who
one day came up the garden path, frothing at the mouth....